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Spillover Bias in Multigenerational Income Regressions

Author

Listed:
  • Jørgen Modalsli
  • Kelly Vosters

Abstract

A growing literature studies long-term income persistence across more than two generations. Despite a rich understanding of measurement-related biases for the parent–child model, far less is known for the multigenerational model that captures transmission from parents and grandparents. We show that even using a 25-year income average can result in a spurious grandparent coefficient. Importantly, for a given parental measure, averaging over more years for grandparents increases spillover bias. We propose an instrumental variables (IV) approach that can more effectively mitigate bias with shorter time spans of income. With Norwegian administrative data, we reveal a positive spillover bias in the grandfather coefficients.

Suggested Citation

  • Jørgen Modalsli & Kelly Vosters, 2024. "Spillover Bias in Multigenerational Income Regressions," Journal of Human Resources, University of Wisconsin Press, vol. 59(3), pages 743-776.
    • Handle: RePEc:uwp:jhriss:v:59:y:2024:i:3:p:743-776
    Note: DOI: https://doi.org/10.3368/jhr.0520-10919R2
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    File URL: http://jhr.uwpress.org/cgi/reprint/59/3/743
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    Cited by:

    1. is not listed on IDEAS
    2. Zachary Ward, 2023. "Intergenerational Mobility in American History: Accounting for Race and Measurement Error," American Economic Review, American Economic Association, vol. 113(12), pages 3213-3248, December.
    3. repec:osf:socarx:uzcfs_v1 is not listed on IDEAS
    4. Thomas van Huizen, 2021. "Teacher bias or measurement error bias? Evidence from track recommendations," Working Papers 2113, Utrecht School of Economics.
    5. Zafar, Rafia, 2022. "Intergenerational Mobility in Income and Consumption: Evidence from Indonesia," SocArXiv uzcfs, Center for Open Science.

    More about this item

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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