Intergenerational Mobility in Britain: Revisiting the Prediction Approach of Dearden, Machin and Reed
AbstractThe prediction approach proposed by Dearden, Machin and Reed (DMR) consists in (1) regressing the observed incomes of the child and parent families on separate sets of predetermined variables, and (2) regressing the child's predicted income on that of the parents. Conceptually, this estimator must relate to the 2SLS/IV estimator. We re-derive the prediction estimator in matrix form, and reconsider its consistency requirements. The measurement model of DMR is then embedded within a simultaneous equations framework, for which an alternative 2SLS/IV estimator is proposed. The latter produces larger estimates for the intergenerational correlation. The policy relevance of the two sets of findings are then discussed.
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Bibliographic InfoPaper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 02.15.
Length: 13 pp.
Date of creation: Aug 2002
Date of revision:
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Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
More information through EDIRC
intergenerational mobility; measurement error; prediction approach; simultaneous equations;
Other versions of this item:
- Ramses H. Abul Naga & Frank A Cowell, 2002. "Intergenerational Mobility in Britain: Revisiting the Prediction Approach of Dearden, Machin and Reed," STICERD - Distributional Analysis Research Programme Papers 62, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Ramses H. Abul Naga & Frank Cowell, 2002. "Intergenerational mobility in Britain : revisiting the prediction approach of Dearden, Machin and Reed," LSE Research Online Documents on Economics 2221, London School of Economics and Political Science, LSE Library.
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-12-02 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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