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Rich Dad, Smart Dad: Decomposing the Intergenerational Transmission of Income

Listed author(s):
  • Lars Lefgren
  • Matthew J. Lindquist
  • David Sims

We construct a simple model, consistent with Becker and Tomes, that decomposes the intergenerational income elasticity into the causal effect of financial resources, the mechanistic transmission of human capital, and the role that human capital plays in the determination of fathers' permanent incomes. We show how a particular set of instrumental variables could separately identify the money and human capital transmission effects. Using data from a 35 percent sample of Swedish sons and their fathers, we show that only a minority of the intergenerational income elasticity can be plausibly attributed to the causal effect of fathers' financial resources.

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File URL: http://dx.doi.org/10.1086/666590
Download Restriction: Access to the online full text or PDF requires a subscription.

File URL: http://dx.doi.org/10.1086/666590
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 120 (2012)
Issue (Month): 2 ()
Pages: 268-303

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Handle: RePEc:ucp:jpolec:doi:10.1086/666590
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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