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A test of the Becker-Tomes model of human capital transmission using microdata on four generations

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  • Lindahl, Mikael

    ()
    (Uppsala University, CESifo, IFAU, IZA and UCLS)

  • Palme, Mårten

    ()
    (Dept. of Economics, Stockholm University)

  • Sandgren Massih, Sofia

    (Uppsala University)

  • Sjögren, Anna

    (IFAU, UCLS and SOFI Stockholm University)

Abstract

We estimate the well-known Becker-Tomes (1986) model of intergenerational transmission of human capital. A Swedish data set which links individual measures on educational attainments of four generations, enables us to use great grandparents’ education as an instrumental variable. This approach was suggested already in Becker- Tomes (1986) but, because of the lack of data, never implemented. The identifying assumption, which holds within the Becker-Tomes framework, is that great grandparents’ education is unrelated to great grandchild’s education, conditional on the education of the parent and grandparent. We test the prediction that the structural parameter for grandparents’ education enters with a negative sign in an intergenerational regression model where the education of a child is linearly related to the education of the parent and the education of the grandparent. We fail to find empirical support for the model’s predictions.

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Bibliographic Info

Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2013:2.

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Length: 17 pages
Date of creation: 16 Jan 2013
Date of revision:
Handle: RePEc:hhs:sunrpe:2013_0002

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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
Phone: +46 8 16 20 00
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Web page: http://www.ne.su.se/
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Keywords: The Becker-Tomes model; Human capital transmission; Multigenerational effects;

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  1. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
  2. Erik Plug & Wim Vijverberg, 2003. "Schooling, Family Background, and Adoption: Is It Nature or Is It Nurture?," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 611-641, June.
  3. Anders Björklund & Mikael Lindahl & Erik Plug, 2006. "The Origins of Intergenerational Associations: Lessons from Swedish Adoption Data," The Quarterly Journal of Economics, MIT Press, vol. 121(3), pages 999-1028, 08.
  4. Helena Holmlund & Mikael Lindahl & Erik Plug, 2011. "The Causal Effect of Parents' Schooling on Children's Schooling: A Comparison of Estimation Methods," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 615-51, September.
  5. Erik Plug & Wim Vijverberg, 2005. "Does Family Income Matter for Schooling Outcomes? Using Adoptees as a Natural Experiment," Economic Journal, Royal Economic Society, vol. 115(506), pages 879-906, October.
  6. Goldberger, A.S., 1989. "Economic And Mechanical Models Of Intergenerational Transmission," Working papers 374, Wisconsin Madison - Social Systems.
  7. Stuhler, Jan, 2012. "Mobility Across Multiple Generations: The Iterated Regression Fallacy," IZA Discussion Papers 7072, Institute for the Study of Labor (IZA).
  8. Lars Lefgren & Matthew J. Lindquist & David Sims, 2012. "Rich Dad, Smart Dad: Decomposing the Intergenerational Transmission of Income," Journal of Political Economy, University of Chicago Press, vol. 120(2), pages 268 - 303.
  9. S Black & Paul Devereux & Kjell Salvanes, 2005. "The More the Merrier? The Effect of Family Size and Birth Order on Childrens Education," CEE Discussion Papers 0050, Centre for the Economics of Education, LSE.
  10. 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.
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