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Intergenerational Earnings Mobility: Mechanism and Measurement

Author

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  • Honggao Cao

    (Institute for Social Research, University of Michigan)

Abstract

Based on a model of two-stage life cycle, this paper investigates and measures intergerational relationships in lifetime earnings. Using data from PSID, I have found that the lifetime earnings transmission equation is non-linear. The elasticity of a son's lifetime earnings with respect to his father's, which may be loosely regarded as the inverse of intergenerational earnings mobility, is not constant across families. Specifically the relationship between the elasticity and the father's log lifetime earnings is of an inverted U- shape: the elasticity is relatively small at both ends of the spectrum, with the maximum in the middle.

Suggested Citation

  • Honggao Cao, 2005. "Intergenerational Earnings Mobility: Mechanism and Measurement," Labor and Demography 0501006, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpla:0501006
    Note: Type of Document - pdf; pages: 43
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    References listed on IDEAS

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    1. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1, May.
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    More about this item

    Keywords

    Intergenerational mobility; non-linear intergenerational relationship; lifetime earnings; earnings mobility; Ben-Porath Model; human capital investment; regression to the mean; PSID;
    All these keywords.

    JEL classification:

    • J - Labor and Demographic Economics

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