The effects of measurement error and omitted variables when using transition matrices to measure intergenerational mobility
This paper examines the consequences of specification error when transition matrices are used to analyse patterns of intergenerational mobility. We show that classical measurement error in both the child’s and parent’s earnings can lead to biased results, with summary mobility measures biased by as much as 20% in some cases. Furthermore our results suggest that the extent of the bias is most severe in the tails of the distribution. Omitted conditioning variables appear to have a modest effect on transition matrices in our model. Copyright Springer Science+Business Media, Inc. 2007
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 5 (2007)
Issue (Month): 2 (August)
|Contact details of provider:|| Web page: http://springerlink.metapress.com/link.asp?id=111137|
References listed on IDEAS
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.:
- Ramses H. ABUL NAGA, 1998.
"Estimating the Intergenerational Correlation of Incomes : An Errors in Variables Framework,"
Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP)
9812, Université de Lausanne, Faculté des HEC, DEEP.
- Ramses H. Abul Naga, 1999. "Estimating the Intergenerational Correlation of Incomes: An Errors in Variables Framework," STICERD - Distributional Analysis Research Programme Papers 44, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Ramses H. Abul Naga, 1999. "Estimating the intergenerational correlation of incomes: an errors in variables framework," LSE Research Online Documents on Economics 6579, London School of Economics and Political Science, LSE Library.
- Gary S. Becker & Nigel Tomes, .
"Human Capital and the Rise and Fall of Families,"
University of Chicago - Population Research Center
84-10, Chicago - Population Research Center.
- Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
- 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.
- Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
- Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
- Steven Haider & Gary Solon, 2006.
"Life-Cycle Variation in the Association between Current and Lifetime Earnings,"
NBER Working Papers
11943, National Bureau of Economic Research, Inc.
- 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.
- Shorrocks, A F, 1978. "The Measurement of Mobility," Econometrica, Econometric Society, vol. 46(5), pages 1013-24, September.
- Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-29, June.
- Nathan D. Grawe & Casey B. Mulligan, 2002.
"Economic Interpretations of Intergenerational Correlations,"
NBER Working Papers
8948, National Bureau of Economic Research, Inc.
- Nathan D. Grawe & Casey B. Mulligan, 2002. "Economic Interpretations of Intergenerational Correlations," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 45-58, Summer.
- Lorraine Dearden & Stephen Machin & H Reed, 1996.
"Intergenerational Mobility in Britain,"
CEP Discussion Papers
dp0281, Centre for Economic Performance, LSE.
- Daniele Checchi & Valentino Dardanoni, 2002. "Mobility comparisons: does using different measures matter?," Departmental Working Papers 2002-15, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
- Nathan D. Grawe, 2004. "Reconsidering the Use of Nonlinearities in Intergenerational Earnings Mobility as a Test for Credit Constraints," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
- Grawe, Nathan D., 2006. "Lifecycle bias in estimates of intergenerational earnings persistence," Labour Economics, Elsevier, vol. 13(5), pages 551-570, October.
- Solon, Gary, 1999. "Intergenerational mobility in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 29, pages 1761-1800 Elsevier.
- Gary Solon, 2002. "Cross-Country Differences in Intergenerational Earnings Mobility," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 59-66, Summer.
- Thierry Magnac & Michael Visser, 1999.
"Transition Models With Measurement Errors,"
The Review of Economics and Statistics,
MIT Press, vol. 81(3), pages 466-474, August.
- Alexandra L. Minicozzi, 2003. "Estimation of sons' intergenerational earnings mobility in the presence of censoring," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(3), pages 291-314.
- Pischke, Jorn-Steffen, 1995.
"Measurement Error and Earnings Dynamics: Some Estimates from the PSID Validation Study,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 13(3), pages 305-14, July.
- Pischke, J.S., 1994. "Measurement Error and Earnings Dynamics: Some Estimates from the PSID Validation Study," Working papers 94-01, Massachusetts Institute of Technology (MIT), Department of Economics.
- 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, May.
- Miles Corak & Andrew Heisz, 1998. "The Intergenerational Earnings and Income Mobility of Canadian," Labor and Demography 9808001, EconWPA.
- D. O'Neill & Sweetman. O. & Van de gaer D., 2005. "The Consequences of Non-Classical Measurement Error for Distributional Analysis," Economics, Finance and Accounting Department Working Paper Series n1490205, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
- Bonggeun Kim & Gary Solon, 2005. "Implications of Mean-Reverting Measurement Error for Longitudinal Studies of Wages and Employment," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 193-196, February.
- Richard Breen & Pasi Moisio, 2004. "Poverty dynamics corrected for measurement error," Journal of Economic Inequality, Springer, vol. 2(3), pages 171-191, July.
- Heisz, Andrew & Corak, Miles, 1996. "The Intergenerational Income Mobility of Canadian Men," Analytical Studies Branch Research Paper Series 1996089e, Statistics Canada, Analytical Studies Branch.
When requesting a correction, please mention this item's handle: RePEc:kap:jecinq:v:5:y:2007:i:2:p:159-178. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.