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Sources of Measurement Errors in Earnings Data: New Estimates of Intergenerational Elasticities

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Abstract

Using intergenerational data with a substantial part of the life-cycle earnings of children and almost the entire life-cycle earnings for their fathers, we present new estimates of intergenerational mobility in Norway. Extending the length of the fathers’ earnings windows from 5 to 30 years increases the estimated elasticities. Varying the age of father at observation has the opposite effect. Our findings indicate that intergenerational earnings mobility may have been strongly overstated in many earlier studies with shorter earnings histories. Biases in the estimated elasticities appear to be related to age and/or life-cycle measurement errors more than persistency in the transitory innovations.

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  • Nilsen, Øivind Anti & Vaage, Kjell & Aakvik, Arild & Jacobsen, Karl, 2008. "Sources of Measurement Errors in Earnings Data: New Estimates of Intergenerational Elasticities," Working Papers in Economics 04/08, University of Bergen, Department of Economics.
  • Handle: RePEc:hhs:bergec:2008_004
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    File URL: http://www.uib.no/filearchive/No.%204-08.pdf
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    1. Anders Bohlmark & Matthew J. Lindquist, 2006. "Life-Cycle Variations in the Association between Current and Lifetime Income: Replication and Extension for Sweden," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 879-900, October.
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    Keywords

    Intergenerational mobility; measurement error.;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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