Rich Dad, Smart Dad: Decomposing the Intergenerational Transmission of Income
We construct a simple model, consistent with Becker and Tomes (1979), that decomposes the intergenerational income elasticity into the causal effect of financial resources, the mechanistic transmission of human capital, and the role that human capital plays in the determination of father’s permanent income. We show how a particular set of instrumental variables could separately identify the money and human capital transmission effects. We further outline two instrumental variables methods for bounding the structural parameters of our model in the presence of imperfect instruments. Using data from a thirty-five percent sample of Swedish sons and their fathers, we show that only a minority of the intergenerational income elasticity can be plausibly attributed to the causal effect of fathers’ financial resources.
|Date of creation:||10 Dec 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden|
Phone: +46 8 16 20 00
Fax: +46 8 16 14 25
Web page: http://www.ne.su.se/
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- Björklund, Anders & Jäntti, Markus & Solon, Gary, 2007.
"Nature and Nurture in the Intergenerational Transmission of Socioeconomic Status: Evidence from Swedish Children and Their Biological and Rearing Parents,"
IZA Discussion Papers
2665, Institute for the Study of Labor (IZA).
- Björklund Anders & Jäntti Markus & Solon Gary, 2007. "Nature and Nurture in the Intergenerational Transmission of Socioeconomic Status: Evidence from Swedish Children and Their Biological and Rearing Parents," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(2), pages 1-23, November.
- Anders Bjorklund & Markus Jantti & Gary Solon, 2007. "Nature and Nurture in the Intergenerational Transmission of Socioeconomic Status: Evidence from Swedish Children and Their Biological and Rearing Parents," NBER Working Papers 12985, National Bureau of Economic Research, Inc.
- Arild Aakvik & Kjell G. Salvanes & Kjell Vaage, 2005.
"Educational Attainment and Family Background,"
German Economic Review,
Verein für Socialpolitik, vol. 6(3), pages 377-394, 08.
- Becker, Gary S & Tomes, Nigel, 1986.
"Human Capital and the Rise and Fall of Families,"
Journal of Labor Economics,
University of Chicago Press, vol. 4(3), pages S1-39, July.
- Gary S. Becker & Nigel Tomes, . "Human Capital and the Rise and Fall of Families," University of Chicago - Population Research Center 84-10, Chicago - Population Research Center.
- Bjorklund, Anders & Chadwick, Laura, 2003. "Intergenerational income mobility in permanent and separated families," Economics Letters, Elsevier, vol. 80(2), pages 239-246, August.
- Bjorklund, Anders & Jantti, Markus, 1997. "Intergenerational Income Mobility in Sweden Compared to the United States," American Economic Review, American Economic Association, vol. 87(5), pages 1009-18, December.
- Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
- Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
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