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Sibling similarities, differences and economic inequality

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  • Bhashkar Mazumder

Abstract

I use improved statistical approaches and much larger samples than previous studies to provide more robust estimates of the correlation in economic outcomes among siblings. A key finding is that more than half the variance in log wages among men is due to differences in family and community background. Slightly smaller estimates in the 0.45 to 0.5 range are found for earnings and family income. For women, the sibling correlation in family income is the same as that found for men. I estimate that the sibling correlation in years of schooling and AFQT test scores is higher than 0.6. In contrast, estimates for a variety of other non-economic outcomes (including physical attributes) are in the 0.2 to 0.4 range. Family and community influences are particularly important for those who start at the bottom of the income distribution. An analysis of the variance in outcomes within families, by quartiles of parent income provides a new set of facts that should inform theoretical models of family resource allocation. I also find that a large portion of the sibling correlation in some economic outcomes can be explained by observable characteristics.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-04-13.

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Date of creation: 2004
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Handle: RePEc:fip:fedhwp:wp-04-13

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Related research

Keywords: Brothers and sisters ; Economics;

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References

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  1. George J. Borjas, 1991. "Ethnic Capital and Intergenerational Mobility," NBER Working Papers 3788, National Bureau of Economic Research, Inc.
  2. Joseph G. Altonji & Thomas A. Dunn, 2000. "An Intergenerational Model of Wages, Hours, and Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 35(2), pages 221-258.
  3. Behrman, J.R. & Pollak, R.A. & Taubman, P., 1990. "The Wealth Model: Efficiency In Education And Distribution In The Family," Working Papers 90-16, University of Washington, Department of Economics.
  4. Bhashkar Mazumder, 2005. "Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 235-255, May.
  5. Momi Dahan & Alejandro Gaviria, 1998. "Parental Actions and Siblings’ Inequality," Research Department Publications 4150, Inter-American Development Bank, Research Department.
  6. Greg J. Duncan & Rachel Dunifon & Jeanne Brooks-Gunn, 2001. "As Ye Sweep, So Shall Ye Reap," American Economic Review, American Economic Association, vol. 91(2), pages 150-154, May.
  7. Björklund, Anders & Eriksson, Tor & Jäntti, Markus & Raaum, Oddbjørn & Österbacka, Eva, 2000. "Brother Correlations in Earnings in Denmark, Finland, Norway and Sweden Compared to the United States," IZA Discussion Papers 158, Institute for the Study of Labor (IZA).
  8. Yona Rubinstein & James J. Heckman, 2001. "The Importance of Noncognitive Skills: Lessons from the GED Testing Program," American Economic Review, American Economic Association, vol. 91(2), pages 145-149, May.
  9. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1982. "Parental Preferences and Provision for Progeny," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 52-73, February.
  10. David I. Levine & Bhashkar Mazumder, 2002. "Choosing the right parents: changes in the intergenerational transmission of inequality between 1980 and the early 1990s," Working Paper Series WP-02-08, Federal Reserve Bank of Chicago.
  11. Anne C. Case & Lawrence F. Katz, 1991. "The Company You Keep: The Effects of Family and Neighborhood on Disadvantaged Youths," NBER Working Papers 3705, National Bureau of Economic Research, Inc.
  12. Gaviria, Alejandro, 2002. "Intergenerational mobility, sibling inequality and borrowing constraints," Economics of Education Review, Elsevier, vol. 21(4), pages 331-340, August.
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Cited by:
  1. Björklund, Anders & Jäntti, Markus & Lindquist, Matthew J., 2007. "Family Background and Income during the Rise of the Welfare State: Brother Correlations in Income for Swedish Men Born 1932-1968," IZA Discussion Papers 3000, Institute for the Study of Labor (IZA).
  2. Bhashkar Mazumder, 2008. "Sibling similarities and economic inequality in the US," Journal of Population Economics, Springer, vol. 21(3), pages 685-701, July.

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