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Earnings persistence across generations: Transmission through health?

Author

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  • Eriksson, Tor

    (Aarhus School of Business, Department of Economics)

  • Bratsberg, Bernt

    (The Ragnar Frisch Centre for Economic Research)

  • Raaum, Oddbjørn

    (The Ragnar Frisch Centre for Economic Research)

Abstract

Using a unique data set that links adult labour market outcomes and health status of a cohort of Danes and their parents, we study the interrelationships between transmission of health and economic status across generations. We first establish new evidence on intergenerational earnings resemblance in Denmark, obtaining estimates of father-child earnings elasticities of .29 for sons and .27 for daughters. Next, we show that children from low-income families are more likely to experience health problems in adulthood, and that poor health outcomes, such as back illness, heart disease, and psychological illness, affect labour earnings negatively. The data further reveal strong correlations of health outcomes across generations. When we condition on health status, estimates of the intergenerational earnings elasticity drop by a substantial amount—28 percent for sons and 25 percent for daughters. These findings point to parental investments in health and resemblance of health across generations as factors behind the pattern of low intergenerational earnings mobility observed in many countries.

Suggested Citation

  • Eriksson, Tor & Bratsberg, Bernt & Raaum, Oddbjørn, 2005. "Earnings persistence across generations: Transmission through health?," Memorandum 35/2005, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2005_035
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    2. Lykke E. Andersen & Augustus Griffin & Justus J. Krause & Gabriel Orduña Montekio, 2017. "Measuring Equality of Opportunity in Early Childhood: A methodological proposal using Demographic and Health Surveys," Development Research Working Paper Series 04/2017, Institute for Advanced Development Studies.
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    4. Akbulut-Yuksel, Mevlude & Kugler, Adriana D., 2016. "Intergenerational persistence of health: Do immigrants get healthier as they remain in the U.S. for more generations?," Economics & Human Biology, Elsevier, vol. 23(C), pages 136-148.
    5. Jäntti, Markus & Bratsberg, Bernt & Røed, Knut & Raaum, Oddbjørn & Naylor, Robin & Österbacka, Eva & Bjørklund, Anders & Eriksson, Tor, 2005. "American exceptionalism in a new light: a comparison of intergenerational earnings mobility in the Nordic countries, the United Kingdom and the United States," Memorandum 34/2005, Oslo University, Department of Economics.
    6. Black, Sandra E. & Devereux, Paul J., 2011. "Recent Developments in Intergenerational Mobility," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 16, pages 1487-1541, Elsevier.
    7. Bhalotra, Sonia & Rawlings, Samantha B., 2011. "Intergenerational persistence in health in developing countries: The penalty of gender inequality?," Journal of Public Economics, Elsevier, vol. 95(3-4), pages 286-299, April.
    8. Akbulut-Yuksel, Mevlude & Kugler, Adriana, 2016. "Intergenerational Persistence of Health in the U.S.: Do Immigrants Get Healthier as They Assimilate?," IZA Discussion Papers 9728, Institute of Labor Economics (IZA).
    9. Sonia Bhalotra & Marcela Umaña-Aponte, 2010. "The Dynamics of Women’s Labour Supply in Developing Countries," The Centre for Market and Public Organisation 10/235, The Centre for Market and Public Organisation, University of Bristol, UK.
    10. Janet Currie, 2009. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 87-122, March.
    11. Anna Christina D'Addio, 2007. "Intergenerational Transmission of Disadvantage: Mobility or Immobility Across Generations?," OECD Social, Employment and Migration Working Papers 52, OECD Publishing.
    12. Janet Currie & Enrico Moretti, 2007. "Biology as Destiny? Short- and Long-Run Determinants of Intergenerational Transmission of Birth Weight," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 231-264.
    13. Qin, Xuezheng & Wang, Tianyu & Zhuang, Castiel Chen, 2016. "Intergenerational transfer of human capital and its impact on income mobility: Evidence from China," China Economic Review, Elsevier, vol. 38(C), pages 306-321.
    14. Coban, Mustafa & Sauerhammer, Sarah, 2017. "Transmission channels of intergenerational income mobility: Empirical evidence from Germany and the Unites States," Discussion Paper Series 138, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    15. Atheendar S. Venkataramani, 2011. "The intergenerational transmission of height: evidence from rural Vietnam," Health Economics, John Wiley & Sons, Ltd., vol. 20(12), pages 1448-1467, December.
    16. Janne Mikkonen & Hanna Remes & Heta Moustgaard & Pekka Martikainen, 2020. "Evaluating the Role of Parental Education and Adolescent Health Problems in Educational Attainment," Demography, Springer;Population Association of America (PAA), vol. 57(6), pages 2245-2267, December.
    17. De Nardi, Mariacristina & Yang, Fang, 2016. "Wealth inequality, family background, and estate taxation," Journal of Monetary Economics, Elsevier, vol. 77(C), pages 130-145.
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    More about this item

    Keywords

    Intergenerational mobility; health and earnings;

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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