In this paper we develop and estimate a factor model of the earnings, labor supply, and wages of young men and young women, their parents and their siblings. We estimate the model using data on matched sibling and parent-child pairs from the National Longitudinal Survey of Labor Market Experience. We measure the extent to which a set of unobserved parental and family factors that drive wage rates and work hours independently of wage rates lead to similarities among family members in labor market outcomes. We find strong family similarities in work hours that run along gender lines. These similarities are primarily due to preferences rather than to labor supply responses to family similarities in wages. The wage factors of the father and mother influence the wages of both sons and daughters. A `sibling' wage factor also plays an important role in wage determination. We find that intergenerational correlations in wages substantially overestimate the direct influence of fathers, and especially mothers, on wages. This is because the father's and mother's wage factors are positively correlated. The relative importance for the variance in earnings of the direct effect of wages, the labor supply response induced by wages, and effect of hours preferences varies by gender, and by age in the case of women. For all groups most of the effect of wages on earnings is direct rather than through a labor supply response.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
4950.
Length: Date of creation: Dec 1994 Date of revision: Handle: RePEc:nbr:nberwo:4950
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Find related papers by JEL classification: D10 - Microeconomics - - Household Behavior - - - General J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
References listed on IDEAS 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.:
Gary S. Becker & Nigel Tomes, 1994.
"X. 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.
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