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Empirical Strategies to Eliminate Life-Cycle Bias in the Intergenerational Elasticity of Earnings Literature

  • Jan Leonard Stuhler

I argue that the empirical strategies for estimation of the intergenerational elasticity of lifetime earnings that are currently employed in the literature might not eliminate bias arising from life-cycle effects. Specifically, I demonstrate that procedures based on the generalized errors-in-variables model suggested by Haider and Solon (2006) or the consideration of differential earnings growth rates across subpopulations may not yield unbiased or consistent estimates. I further argue that instrumental variable estimators will not identify an upper bound for the true population parameter.

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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 346.

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Length: 31 p.
Date of creation: 2010
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp346
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  1. Björklund, Anders & Lindahl, Mikael & Plug, Erik, 2005. "The Origins of Intergenerational Associations: Lessons from Swedish Adoption Data," IZA Discussion Papers 1739, Institute for the Study of Labor (IZA).
  2. Björklund, Anders & Jäntti, Markus & Lindquist, Matthew J., 2007. "Family Background and Income during the Rise of the Welfare State: Brother Correlations in Income for Swedish Men Born 1932-1968," IZA Discussion Papers 3000, Institute for the Study of Labor (IZA).
  3. María Cervini Plá, 2009. "Measuring intergenerational earnings mobility in Spain: A selection-bias-free," Working Papers wpdea0904, Department of Applied Economics at Universitat Autonoma of Barcelona.
  4. Nilsen, Øivind Anti & Vaage, Kjell & Aakvik, Arild & Jacobsen, Karl, 2008. "Estimates of Intergenerational Elasticities Based on Lifetime Earnings," IZA Discussion Papers 3709, Institute for the Study of Labor (IZA).
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