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Estimates of Intergenerational Elasticities Based on Lifetime Earnings

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Author Info

  • Nilsen, Øivind Anti

    ()
    (Norwegian School of Economics)

  • Vaage, Kjell

    ()
    (University of Bergen)

  • Aakvik, Arild

    ()
    (University of Bergen)

  • Jacobsen, Karl

    ()
    (Statistics Norway)

Abstract

Using Norwegian intergenerational data with a substantial part of the life-cycle earnings of children and almost the entire life-cycle earnings for their fathers, we present new estimates of intergenerational mobility. Extending the length of the fathers' earnings windows from 5 to 30 years increases the estimated elasticities. Increasing the age of father at observation has the opposite effect. Our findings indicate that intergenerational earnings mobility may have been strongly overstated in many earlier studies with shorter earnings histories. Biases in the estimated elasticities appear to be related to age and/or life-cycle measurement errors more than persistency in the transitory innovations.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3709.

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Length: 28 pages
Date of creation: Sep 2008
Date of revision:
Publication status: published as 'Intergenerational Earnings Mobility Revisited: Estimates Based on Lifetime Earnings' in: Scandinavian Journal of Economics, 2012, 114 (1), 1 - 23
Handle: RePEc:iza:izadps:dp3709

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Keywords: intergenerational mobility; measurement error;

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References

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  1. Bhashkar Mazumder, 2001. "The mis-measurement of permanent earnings: new evidence from Social Security earnings data," Working Paper Series, Federal Reserve Bank of Chicago WP-01-24, Federal Reserve Bank of Chicago.
  2. Steven Haider & Gary Solon, 2006. "Life-Cycle Variation in the Association between Current and Lifetime Earnings," NBER Working Papers 11943, National Bureau of Economic Research, Inc.
  3. Bernt Bratsberg & Knut Røed & Oddbjørn Raaum & Robin Naylor & Markus Ja�ntti & Tor Eriksson & Eva O�sterbacka, 2007. "Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(519), pages C72-C92, 03.
  4. Gary S. Becker & Nigel Tomes, . "Human Capital and the Rise and Fall of Families," University of Chicago - Population Research Center, Chicago - Population Research Center 84-10, Chicago - Population Research Center.
  5. Gary Solon, 1984. "Estimating Autocorrelations in Fixed-Effects Models," NBER Technical Working Papers 0032, National Bureau of Economic Research, Inc.
  6. Anders Bohlmark & Matthew J. Lindquist, 2006. "Life-Cycle Variations in the Association between Current and Lifetime Income: Replication and Extension for Sweden," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 24(4), pages 879-900, October.
  7. Aakvik, Arild & Salvanes, Kjell G. & Vaage, Kjell, 2003. "Measuring Heterogeneity in the Returns to Education in Norway Using Educational Reforms," IZA Discussion Papers 815, Institute for the Study of Labor (IZA).
  8. Grawe, Nathan D., 2006. "Lifecycle bias in estimates of intergenerational earnings persistence," Labour Economics, Elsevier, Elsevier, vol. 13(5), pages 551-570, October.
  9. Michael Baker & Gary Solon, 2003. "Earnings Dynamics and Inequality among Canadian Men, 1976-1992: Evidence from Longitudinal Income Tax Records," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 21(2), pages 267-288, April.
  10. 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.
  11. Espen Bratberg & Oivind Anti Nilsen & Kjell Vaage, 2005. "Intergenerational Earnings Mobility in Norway: Levels and Trends," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 107(3), pages 419-435, 09.
  12. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, American Economic Association, vol. 82(3), pages 393-408, June.
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Cited by:
  1. Jan Leonard Stuhler, 2010. "Empirical Strategies to Eliminate Life-Cycle Bias in the Intergenerational Elasticity of Earnings Literature," SOEPpapers on Multidisciplinary Panel Data Research 346, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Jo Blanden, 2009. "How Much Can We Learn from International Comparisons of Intergenerational Mobility?," CEE Discussion Papers, Centre for the Economics of Education, LSE 0111, Centre for the Economics of Education, LSE.
  3. Nordin , Martin & Rooth, Dan-Olof, 2011. "Ability Heterogeneity in Intergenerational Mobility," Working Papers, Lund University, Department of Economics 2011:18, Lund University, Department of Economics.
  4. Jo Blanden, 2009. "How much can we learn from international comparisons of intergenerational mobility?," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 28283, London School of Economics and Political Science, LSE Library.
  5. Sajid Amin Javed & Mohammad Irfan, 2012. "Intergenerational Mobility: Evidence from Pakistan Panel Household Survey," Poverty and Social Dynamics Paper Series, Pakistan Institute of Development Economics 2012:05, Pakistan Institute of Development Economics.
  6. Quheng, Deng & Gustafsson, Björn Anders & Li, Shi, 2012. "Intergenerational Income Persistency in Urban China," IZA Discussion Papers 6907, Institute for the Study of Labor (IZA).

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