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Intergenerational Earnings Mobility: Mechanism and Measurement

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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.

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File URL: http://128.118.178.162/eps/lab/papers/0501/0501006.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0501006.

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Length: 43 pages
Date of creation: 09 Jan 2005
Date of revision:
Handle: RePEc:wpa:wuwpla:0501006

Note: Type of Document - pdf; pages: 43
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Web page: http://128.118.178.162

Related research

Keywords: Intergenerational mobility; non-linear intergenerational relationship; lifetime earnings; earnings mobility; Ben-Porath Model; human capital investment; regression to the mean; PSID;

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  1. Durlauf, S.N., 1992. "A Theory of Persistent Income Inequality," Papers 47, Stanford - Institute for Thoretical Economics.
  2. Blinder, Alan S & Weiss, Yoram, 1976. "Human Capital and Labor Supply: A Synthesis," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 449-72, June.
  3. Rosen, Sherwin, 1976. "A Theory of Life Earnings," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S45-67, August.
  4. Goldberger, Arthur S, 1989. "Economic and Mechanical Models of Intergenerational Transmission," American Economic Review, American Economic Association, vol. 79(3), pages 504-13, June.
  5. Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S11-44, August.
  6. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  7. Peters, H Elizabeth, 1992. "Patterns of Intergenerational Mobility in Income and Earnings," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 456-66, August.
  8. repec:att:wimass:9329 is not listed on IDEAS
  9. Behrman, Jere & Tarbman, Paul, 1985. "Intergenerational Earnings Mobility in the United States: Some Estimates and a Test of Becker's Intergenerational Endowments Model," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 144-51, February.
  10. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  11. Haley, William J, 1973. "Human Capital: The Choice Between Investment and Income," American Economic Review, American Economic Association, vol. 63(5), pages 929-44, December.
  12. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
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