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Earnings persistence across generations: Transmission through health?

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Author Info

  • Eriksson, Tor

    ()
    (Aarhus School of Business, Department of Economics)

  • Bratsberg, Bernt

    ()
    (The Ragnar Frisch Centre for Economic Research)

  • Raaum, Oddbjørn

    ()
    (The Ragnar Frisch Centre for Economic Research)

Abstract

Using a unique data set that links adult labour market outcomes and health status of a cohort of Danes and their parents, we study the interrelationships between transmission of health and economic status across generations. We first establish new evidence on intergenerational earnings resemblance in Denmark, obtaining estimates of father-child earnings elasticities of .29 for sons and .27 for daughters. Next, we show that children from low-income families are more likely to experience health problems in adulthood, and that poor health outcomes, such as back illness, heart disease, and psychological illness, affect labour earnings negatively. The data further reveal strong correlations of health outcomes across generations. When we condition on health status, estimates of the intergenerational earnings elasticity drop by a substantial amount—28 percent for sons and 25 percent for daughters. These findings point to parental investments in health and resemblance of health across generations as factors behind the pattern of low intergenerational earnings mobility observed in many countries.

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Bibliographic Info

Paper provided by Oslo University, Department of Economics in its series Memorandum with number 35/2005.

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Length: 26 pages
Date of creation: 30 Dec 2005
Date of revision:
Handle: RePEc:hhs:osloec:2005_035

Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Email:
Web page: http://www.oekonomi.uio.no/indexe.html
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Keywords: Intergenerational mobility; health and earnings;

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References

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Citations

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Cited by:
  1. Sonia Bhalotra & Sam Rawlings, 2010. "Intergenerational persistence in health in developing countries: the penalty of gender inequality," The Centre for Market and Public Organisation 10/249, Department of Economics, University of Bristol, UK.
  2. Sandra E. Black & Paul J. Devereux, 2010. "Recent Developments in Intergenerational Mobility," Working Papers 201025, Geary Institute, University College Dublin.
  3. Janet Currie, 2009. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 87-122, March.
  4. Janet Currie & Enrico Moretti, 2007. "Biology as Destiny? Short- and Long-Run Determinants of Intergenerational Transmission of Birth Weight," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 231-264.
  5. Jäntti, Markus & Bratsberg, Bernt & Røed, Knut & Raaum, Oddbjørn & Naylor, Robin & Österbacka, Eva & Björklund, Anders & Eriksson, Tor, 2006. "American Exceptionalism in a New Light: A Comparison of Intergenerational Earnings Mobility in the Nordic Countries, the United Kingdom and the United States," IZA Discussion Papers 1938, Institute for the Study of Labor (IZA).

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