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The Effects of Redistribution on Occupational Choice and Intergenerational Mobility: Does Wage Equality Nail the Cobbler to His Last?

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Author Info

  • Sjögren, Anna

    () (Dept. of Economics, Stockholm School of Economics)

Abstract

In this study we extend the classical Roy-model of selection on the labor market by introducing uncertainty about ones ability linked to family background. In our model, this mechanism rather than differences in access to capital markets links occupational outcomes of offspring to parents. Income redistribution is studied and we find that redistribution has implications for intergenerational mobility and talent allocation through its influence on individual occupational choices. We conclude that the presence of a trade-off between redistribution and intergenerational mobility depends on the extent of similarity of occupations with regard to ability sensitivity and wage rates, and on the degree of individual risk aversion. Whether redistribution occurs within an occupation or simultaneously within and across occupations is also important.

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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 239.

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Length: 31 pages
Date of creation: 28 May 1998
Date of revision:
Handle: RePEc:hhs:hastef:0239

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Keywords: intergenerational mobility; occupational choice; talent allocation; redistribution;

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  1. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implicationsfor Growth," University of Chicago - George G. Stigler Center for Study of Economy and State 65, Chicago - Center for Study of Economy and State.
  2. Per-Anders Edin & Bertil Holmlund, 1995. "The Swedish Wage Structure: The Rise and Fall of Solidarity Wage Policy?," NBER Chapters, in: Differences and Changes in Wage Structures, pages 307-344 National Bureau of Economic Research, Inc.
  3. Willis, Robert J., 1987. "Wage determinants: A survey and reinterpretation of human capital earnings functions," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 10, pages 525-602 Elsevier.
  4. Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-29, June.
  5. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
  6. Sicherman, Nachum & Galor, Oded, 1990. "A Theory of Career Mobility," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 169-92, February.
  7. Gary S. Becker & Nigel Tomes, . "Human Capital and the Rise and Fall of Families," University of Chicago - Population Research Center 84-10, Chicago - Population Research Center.
  8. Checchi, Daniele & Ichino, Andrea & Rustichini, Aldo, 1999. "More equal but less mobile?: Education financing and intergenerational mobility in Italy and in the US," Journal of Public Economics, Elsevier, vol. 74(3), pages 351-393, December.
  9. Casey B. Mulligan, . "Economic and Biological Approaches to Inheritance: Some Evidence 1996," University of Chicago - Population Research Center 95-14, Chicago - Population Research Center.
  10. Orazem, Peter F & Mattila, J Peter, 1991. "Human Capital, Uncertain Wage Distributions, and Occupational and Educational Choices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(1), pages 103-22, February.
  11. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
  12. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
  13. Caballero, Ricardo J, 1991. "On the Sign of the Investment-Uncertainty Relationship," American Economic Review, American Economic Association, vol. 81(1), pages 279-88, March.
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Cited by:
  1. Hassler, J. & Rodriguez Mora, J.V., 1998. "IQ, Social Mobility and Growth," Papers 635, Stockholm - International Economic Studies.

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