In Search of Intergenerational Credit Constraints Among Canadian Men: Quantile Versus Mean Regression Tests for Binding Credit Constraints
AbstractSeveral recent papers have cited non-linearities in the relationship between incomes of parents and their children as evidence of important intergenerational credit constraints. This paper argues that any pattern in the conditional expectation function can be justified by a properly constructed story with credit constraints. This raises questions about the validity of the approach. Quantile regressions provide an alternative test. Using data from Canadian tax files, this paper finds results contrary to the credit constraints hypothesis; the non-linearities in the regression function are driven by the low-ability (unconstrained) sons rather than high-ability (presumably constrained) sons.
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Bibliographic InfoPaper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2001158e.
Date of creation: 30 Jan 2001
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Labour; Income; pensions; spending and wealth; Wages; salaries and other earnings; Household; family and personal income;
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