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Human Capital Spillovers and the Geography of Intergenerational Mobility

Listed author(s):
  • Brant Abbott

    (Queens University)

  • Giovanni Gallipoli

    (University of British Columbia)

We develop and estimate an equilibrium model of geographic variation in the intergenerational elasticity of earnings (IGE). The theory extends the Becker-Tomes model, introducing a production sector in which workers' human capital inputs are complements. In this setting the return to parental human capital investments is lower where skill complementarity is more intense, and this is reflected in less intergenerational persistence. We also show that education subsidies may be more desirable where skill complementarities are stronger, endogenously leading to a negative correlation between progressive public policy and IGE. Using microdata we construct location-specific measures of skill complementarity and document that patterns of geographic variation in IGE are consistent with this hypothesis. Geographic differences in skill complementarity directly account for roughly one fifth of cross-country variation in IGE, and possibly more if one allows for the indirect effect through government expenditure in public education. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2016.06.005
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 25 (2017)
Issue (Month): (April)
Pages: 208-233

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Handle: RePEc:red:issued:16-89
DOI: 10.1016/j.red.2016.05.005
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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
  2. Matilde Bombardini & Giovanni Gallipoli & German Pupato, 2012. "Skill Dispersion and Trade Flows," American Economic Review, American Economic Association, vol. 102(5), pages 2327-2348, August.
  3. Brant Abbott & Giovanni Gallipoli & Costas Meghir & Giovanni L. Violante, 2013. "Education Policy and Intergenerational Transfers in Equilibrium," Working Paper Series 15_13, The Rimini Centre for Economic Analysis.
  4. Fatih Guvenen & Burhanettin Kuruscu & Serdar Ozkan, 2014. "Taxation of Human Capital and Wage Inequality: A Cross-Country Analysis," Review of Economic Studies, Oxford University Press, vol. 81(2), pages 818-850.
  5. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1, October.
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  8. Diego Restuccia & Carlos Urrutia, 2004. "Intergenerational Persistence of Earnings: The Role of Early and College Education," American Economic Review, American Economic Association, vol. 94(5), pages 1354-1378, December.
  9. Miles Corak, 2013. "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 79-102, Summer.
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  12. Guido Matias Cortes & Giovanni Gallipoli, 2014. "The Costs of Occupational Mobility: An Aggregate Analysis," Working Papers 2014-015, Human Capital and Economic Opportunity Working Group.
  13. Enrico Moretti, 2004. "Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions," American Economic Review, American Economic Association, vol. 94(3), pages 656-690, June.
  14. Bombardini, Matilde & Gallipoli, Giovanni & Pupato, Germán, 2014. "Unobservable skill dispersion and comparative advantage," Journal of International Economics, Elsevier, vol. 92(2), pages 317-329.
  15. Guido Matias Cortes & Giovanni Gallipoli, 2014. "The Costs of Occupational Mobility: An Aggregate Analysis," Working Papers 2014-015, Human Capital and Economic Opportunity Working Group.
  16. Jo Blanden, 2013. "Cross-Country Rankings In Intergenerational Mobility: A Comparison Of Approaches From Economics And Sociology," Journal of Economic Surveys, Wiley Blackwell, vol. 27(1), pages 38-73, 02.
  17. Jo Blanden, 2013. "Cross-national rankings of intergenerational mobility: a comparison of approaches from economics and sociology," LSE Research Online Documents on Economics 59310, London School of Economics and Political Science, LSE Library.
  18. Kenneth J. Arrow, 1962. "The Economic Implications of Learning by Doing," Review of Economic Studies, Oxford University Press, vol. 29(3), pages 155-173.
  19. Marek Pycia, 2012. "Stability and Preference Alignment in Matching and Coalition Formation," Econometrica, Econometric Society, vol. 80(1), pages 323-362, 01.
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