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Accounting for Intergenerational Earnings Persistence: Can We Distinguish Between Education, Skills, and Health?

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  • Hirvonen, Lalaina

    (Swedish Institute for Social Research, Stockholm University)

Abstract

This paper illustrates the difficulty in disentangling the underlying channels of intergenerational earnings persistence by means of path analysis and recursive models. On closer examination, these models manifest their shortcomings as regards accounting for how parental earnings have a direct impact on their offspring’s earnings, but also have an e ffect through other factors such as education, skills and health. The estimated e ffects of these mediating factors are likely to capture the influence of other mechanisms not taken into account in the analysis. Nonetheless, the results suggest that education is the most important mechanism in the earnings transmission process, although it is sensitive to the inclusion of other covariates and the order in which these are entered into the equation. Nonlinear specifications suggest that the e ffect of a father’s earnings on his son’s has the greatest impact primarily through education and IQ in the upper middle categories of the earnings distribution of the fathers, while health status is of secondary importance.

Suggested Citation

  • Hirvonen, Lalaina, 2010. "Accounting for Intergenerational Earnings Persistence: Can We Distinguish Between Education, Skills, and Health?," Working Paper Series 2/2010, Stockholm University, Swedish Institute for Social Research.
    • Handle: RePEc:hhs:sofiwp:2010_002
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    File URL: http://www.sofi.su.se/content/1/c6/03/09/74/WP10no2.pdf
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    Cited by:

    1. Jo Blanden & Robert Haveman & Timothy Smeeding & Kathryn Wilson, 2014. "Intergenerational Mobility in the United States and Great Britain: A Comparative Study of Parent–Child Pathways," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(3), pages 425-449, September.
    2. Lindsey Macmillan, 2013. "The role of non-cognitive and cognitive skills, behavioural and educational outcomes in accounting for the intergenerational transmission of worklessness," DoQSS Working Papers 13-01, Quantitative Social Science - UCL Social Research Institute, University College London.
    3. 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.
    4. Könings, Fabian & Schwab, Jakob, 2018. "Accounting for Intergenerational Social Mobility in Low- and Middle-Income Countries - Evidence from the Poorest in Ethiopia, India, Peru, and Vietnam," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181634, Verein für Socialpolitik / German Economic Association.

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