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Two-Sample Two-Stage Least Squares (TSTSLS) estimates of earnings mobility: how consistent are they?

Author

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  • John Jerrim

    (Department of Quantitative Social Science, Institute of Education, University of London)

  • Alvaro Choi

    (Institut d’Economia de Barcelona, University of Barcelona)

  • Rosa Simancas Rodriguez

    (University of Extremadura)

Abstract

Academics and policymakers have shown great interest in cross-national comparisons of intergenerational earnings mobility. However, producing consistent and comparable estimates of earnings mobility is not a trivial task. In most countries researchers are unable to observe earnings information for two generations. They are thus forced to rely upon imputed data instead. This paper builds upon previous work by considering the consistency of the intergenerational correlation (Ï ) as well as the elasticity (β), how this changes when using a range of different instrumental (imputer) variables, and highlighting an important but infrequently discussed measurement issue. Our key finding is that, while TSTSLS estimates of β and Ï are both likely to be inconsistent, the magnitude of this problem is much greater for the former than it is for the latter. We conclude by offering advice on estimating earnings mobility using this methodology.

Suggested Citation

  • John Jerrim & Alvaro Choi & Rosa Simancas Rodriguez, 2014. "Two-Sample Two-Stage Least Squares (TSTSLS) estimates of earnings mobility: how consistent are they?," DoQSS Working Papers 14-17, Quantitative Social Science - UCL Social Research Institute, University College London.
    • Handle: RePEc:qss:dqsswp:1417
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    Cited by:

    1. Paul Gregg & Ricky Kanabar, 2022. "Parental homeownership and education: the implications for offspring wealth inequality in GB," CEPEO Working Paper Series 22-01, UCL Centre for Education Policy and Equalising Opportunities, revised Jul 2023.
    2. Kanabar, Ricky & Gregg, Paul, 2021. "Intergenerational wealth transmission in Great Britain," ISER Working Paper Series 2021-04, Institute for Social and Economic Research.
    3. Pacini, David & Windmeijer, Frank, 2016. "Robust inference for the Two-Sample 2SLS estimator," Economics Letters, Elsevier, vol. 146(C), pages 50-54.
    4. Álvaro Choi & María Gil & Mauro Mediavilla & Javier Valbuena, 2016. "The evolution of educational inequalities in Spain: dynamic evidence from repeated cross-sections," Working Papers 2016/25, Institut d'Economia de Barcelona (IEB).
    5. Paul Gregg & Lindsey Macmillan & Claudia Vittori, 2017. "Moving Towards Estimating Sons' Lifetime Intergenerational Economic Mobility in the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(1), pages 79-100, February.
    6. Álvaro Choi & María Gil & Mauro Mediavilla & Javier Valbuena, 2016. "Double toil and trouble: grade retention and academic performance," Working Papers 2016/7, Institut d'Economia de Barcelona (IEB).

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    More about this item

    Keywords

    : Earnings mobility; two sample two stage least squares;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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