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

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  • Bratsberg, Bernt
  • Roed, Knut
  • Raaum, Oddbjorn
  • Naylor, Robin
  • Jantti, Markus
  • Eriksson, Tor
  • Osterbacka, Eva

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.

Suggested Citation

  • Bratsberg, Bernt & Roed, Knut & Raaum, Oddbjorn & Naylor, Robin & Jantti, Markus & Eriksson, Tor & Osterbacka, Eva, 2006. "Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons," Economic Research Papers 269753, University of Warwick - Department of Economics.
  • Handle: RePEc:ags:uwarer:269753
    DOI: 10.22004/ag.econ.269753
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    More about this item

    Keywords

    Financial Economics; International Development;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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