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Mobility Across Multiple Generations: The Iterated Regression Fallacy

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  • Stuhler, Jan

    ()
    (University College London)

Abstract

Conflicting views about the degree of long-run mobility across multiple generations persist because direct empirical evidence is scarce. Predictions are instead routinely derived by iteration of intergenerational measures, a procedure which implies high long-run mobility even when intergenerational mobility is low. However, the assumption that regression implies perpetual regression is a statistical fallacy. I examine this fallacy, its historical background, and its prevalence. I then present various simple models of intergenerational transmission to consider how the relation between intergenerational and multigenerational mobility is affected by elements of the transmission process. I discuss the role of market luck and indirect transmission; the multiplicity of skills; the role of grandparents; and the causal effect of parental income. The direction of bias depends on modeling assumptions, but elementary properties of the transmission process imply that long-run mobility will likely be lower, possibly much lower, than predictions from intergenerational evidence suggest.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7072.

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Length: 13 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:iza:izadps:dp7072

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Related research

Keywords: intergenerational mobility; multigenerational mobility; intergenerational income elasticity; regression fallacy;

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References

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  1. Lindahl, Mikael & Palme, Mårten & Sandgren Massih, Sofia & Sjögren, Anna, 2012. "The Intergenerational Persistence of Human Capital: An Empirical Analysis of Four Generations," IZA Discussion Papers 6463, Institute for the Study of Labor (IZA).
  2. Jeffrey S. Zax & Daniel I. Rees, 2002. "IQ, Academic Performance, Environment, and Earnings," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 600-616, November.
  3. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July.
  4. Piketty, Thomas, 2000. "Theories of persistent inequality and intergenerational mobility," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 8, pages 429-476 Elsevier.
  5. Conlisk, John, 1974. "Can Equalization of Opportunity Reduce Social Mobility?," American Economic Review, American Economic Association, vol. 64(1), pages 80-90, March.
  6. Gregory Clark & Neil Cummins, 2013. "Surnames and social mobility: England 1230-2012," Economic History Working Papers 54515, London School of Economics and Political Science, Department of Economic History.
  7. 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.
  8. Goldberger, A.S., 1989. "Economic And Mechanical Models Of Intergenerational Transmission," Working papers 374, Wisconsin Madison - Social Systems.
  9. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
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Cited by:
  1. Lindahl, Mikael & Palme, Mårten & Sandgren Massih, Sofia & Sjögren, Anna, 2013. "A test of the Becker-Tomes model of human capital transmission using microdata on four generations," Research Papers in Economics 2013:2, Stockholm University, Department of Economics.
  2. Nybom, Martin & Stuhler, Jan, 2013. "Interpreting Trends in Intergenerational Income Mobility," IZA Discussion Papers 7514, Institute for the Study of Labor (IZA).
  3. Gary Solon, 2013. "Theoretical Models of Inequality Transmission across Multiple Generations," NBER Working Papers 18790, National Bureau of Economic Research, Inc.
  4. Nybom, Martin & Stuhler, Jan, 2014. "Interpreting Trends in Intergenerational Mobility," Working Paper Series 3/2014, Swedish Institute for Social Research.

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