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Panel Data Estimation of the Intergenerational Correlation of Incomes

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Author Info

  • Ramses ABUL NAGA
  • Jaya KRISHNAKUMAR

Abstract

We consider the problem of estimating the intergenerational correlation of incomes in the context of a panel data framework with measurement errors. We present single equation estimation methods as well as system methods under various assumptions regarding the serial correlation of the error term and taking into account possible correlations among children of the same family. Application to a sample of US parents and children leads to estimates of the order of 0.42 to 0.60 for the coefficient of income transmission.

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File URL: http://www.hec.unil.ch/deep/textes/9910.pdf
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Bibliographic Info

Paper 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 9910.

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Length: 27 pages
Date of creation: Jul 1999
Date of revision:
Publication status: Published in Panel Data : Future Research Directions, Essays in Honour of Professor Pietro Balestra, Krishnakumar, J. and Ronchetti, E. (eds), Elsevier, Amsterdam, 2000
Handle: RePEc:lau:crdeep:9910

Contact details of provider:
Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.64
Fax: ++41 21 692.33.05
Email:
Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
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Related research

Keywords: intergenerational mobility; panel data; errors in variables;

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References

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  1. Ramses H. ABUL NAGA, 1998. "Estimating the Intergenerational Correlation of Incomes : An Errors in Variables Framework," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9812, Université de Lausanne, Faculté des HEC, DEEP.
  2. Sean Becketti & William Gould & Lee Lillard & Finis Welch, 1985. "The Panel Study of Income Dynamics After Fourteen Years: An Evaluation," UCLA Economics Working Papers 361, UCLA Department of Economics.
  3. Joseph G. Altonji & Thomas A. Dunn, 1991. "Relationships Among the Family Incomes and Labor Market Outcomes of Relatives," NBER Working Papers 3724, National Bureau of Economic Research, Inc.
  4. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
  5. Griliches, Zvi, 1986. "Economic data issues," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 25, pages 1465-1514 Elsevier.
  6. Lorraine Dearden & Steve Machin & Howard Reed, 1995. "Intergenerational mobility in Britain," IFS Working Papers W95/20, Institute for Fiscal Studies.
  7. Bjorklund, Anders & Jantti, Markus, 1997. "Intergenerational Income Mobility in Sweden Compared to the United States," American Economic Review, American Economic Association, vol. 87(5), pages 1009-18, December.
  8. Behrman, Jere R & Taubman, Paul, 1990. "The Intergenerational Correlation between Children's Adult Earnings and Their Parents' Income: Result from the Michigan Panel Survey of Income Dynamics," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 36(2), pages 115-27, June.
  9. Bowles, Samuel, 1972. "Schooling and Inequality from Generation to Generation," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S219-S51, Part II, .
  10. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
  11. Becketti, Sean, et al, 1988. "The Panel Study of Income Dynamics after Fourteen Years: An Evaluatio n," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 472-92, October.
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Citations

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Cited by:
  1. Ramses H. Abul Naga, 1999. "Estimating the intergenerational correlation of incomes: an errors in variables framework," LSE Research Online Documents on Economics 6579, London School of Economics and Political Science, LSE Library.
  2. Ramses H. Abul Naga, 2001. "Galtonian regression of intergenerational income linkages: biased procedures, a new estimator and mean-square error comparisons," LSE Research Online Documents on Economics 6564, London School of Economics and Political Science, LSE Library.
  3. Ramses Abul Naga, 2008. "Biases of the ordinary least squares and instrumental variables estimators of the intergenerational earnings elasticity: Revisited in the light of panel data," Journal of Economic Inequality, Springer, vol. 6(4), pages 323-350, December.
  4. Ramses H. ABUL NAGA, 2000. "Galtonian Regression of Intergenerational Income Linkages : Biased Procedures, a New Estimator and Mean-Square Error Comparisons," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 00.13, Université de Lausanne, Faculté des HEC, DEEP.
  5. Ramses H. ABUL NAGA, 1998. "Estimating the Intergenerational Correlation of Incomes : An Errors in Variables Framework," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9812, Université de Lausanne, Faculté des HEC, DEEP.
  6. Ramses H. ABUL NAGA, 2001. "Biases of the Ordinary Least Squares and Instrumental Variables Estimators of the Intergenerational Earnings Correlation : Revisited in the Light of Panel Data," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 01.05, Université de Lausanne, Faculté des HEC, DEEP.

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