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|
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- Arild Aakvik & Kjell G. Salvanes & Kjell Vaage, 2005.
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NBER Working Papers
12985, National Bureau of Economic Research, Inc.
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"Human Capital and the Rise and Fall of Families,"
University of Chicago - Population Research Center
84-10, Chicago - Population Research Center.
- Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
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- 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.
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