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Nonlinearities in Intergenerational Earnings Mobility : Consequences for Cross-Country Comparisons

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Author Info
Bratsberg,Bernt (Ragnar Frisch Centre for Economic Research)
Røed, Knut (Ragnar Frisch Centre for Economic Research)
Raaum, Oddbjørn (Ragnar Frisch Centre for Economic Research)
Naylor, Robin (University of Warwick)
Jäntti, Markus (Åbo Akademi University)
Eriksson, Tor (Aarhus School of Business)
Österbacka, Eva (Åbo Akademi University)

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Abstract

We show that the patterns of intergenerational earnings mobility in Denmark, Finland, and Norway, unlike those for the US and the UK, are highly nonlinear. The Nordic relationship between log earnings of sons and fathers is flat in the lower segments of the fathers’ earnings distribution – sons growing up in the poorest households have the same adult earnings prospects as sons in moderately poor households – and is increasingly positive in middle and upper segments. This convex pattern contrasts sharply with our findings for the United States and the United Kingdom, where the relationship is much closer to being linear. As a result, cross-country comparisons of intergenerational earnings elasticities may be misleading with respect to transmission mechanisms in the central parts of the earnings distribution, and uninformative in the tails of the distribution.

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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 782.

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Length: 35 pages
Date of creation: 2007
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Handle: RePEc:wrk:warwec:782

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Find related papers by JEL classification:
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
J62 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Job, Occupational and Intergenerational Mobility; Promotion

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References listed on IDEAS
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  1. Gibbons, Steve & Machin, Stephen, 2003. "Valuing English primary schools," Journal of Urban Economics, Elsevier, vol. 53(2), pages 197-219, March. [Downloadable!] (restricted)
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  6. Steven Haider & Gary Solon, 2006. "Life-Cycle Variation in the Association between Current and Lifetime Earnings," American Economic Review, American Economic Association, vol. 96(4), pages 1308-1320, September. [Downloadable!]
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  7. Haegeland, Torbjorn & Klette, Tor Jakob & Salvanes, Kjell G, 1999. " Declining Returns to Education in Norway? Comparing Estimates across Cohorts, Sectors and Over Time," Scandinavian Journal of Economics, Blackwell Publishing, vol. 101(4), pages 555-76, December. [Downloadable!] (restricted)
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  8. Bhashkar Mazumder, 2005. "Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 235-255, 07. [Downloadable!] (restricted)
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  10. Raaum, Oddbjørn & Salvanes, Kjell G. & Sørensen, Erik Ø., 2003. "The Impact of a Primary School Reform on Educational Stratification: A Norwegian Study of Neighbour and School Mate Correlations," IZA Discussion Papers 953, Institute for the Study of Labor (IZA). [Downloadable!]
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  13. Oddbjørn Raaum & Kjell G. Salvanes & Erik O. Sørensen, 2006. "The Neighbourhood is Not What it Used to be," Economic Journal, Royal Economic Society, vol. 116(508), pages 200-222, 01. [Downloadable!] (restricted)
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  14. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Stephen Machin, 2008. "The new economics of education: methods, evidence and policy," Journal of Population Economics, Springer, vol. 21(1), pages 1-19, January. [Downloadable!] (restricted)
  2. repec:ese:iserwp: is not listed on IDEAS
  3. Espen Bratberg & Øivind Anti Nilsen & Kjell Vaage, 2007. "Job Losses and Child Outcomes," IZA Discussion Papers 2895, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Torbjørn Hægeland, Oddbjørn Raaum and Kjell G. Salvanes, 2007. "Pennies from heaven. Using exogenous tax variation to identify effects of school resources on pupil achievement," Discussion Papers 508, Research Department of Statistics Norway. [Downloadable!]
    Other versions:
  5. repec:bep:eaptop:v:7:y:2007:i:2:p:1713-1713 is not listed on IDEAS
  6. repec:bep:eapadv:v:7:y:2008:i:2:p:1767-1767 is not listed on IDEAS
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