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Transmission of Human Capital across Four Generations: Intergenerational Correlations and a Test of the Becker-Tomes Model

Most previous studies on intergenerational transmission of human capital are restricted to two generations - between the parent and the child generation. In this paper we investigate if there is an independent effect of the grandparent and the great grandparent generations in this process. We use a dataset where we are able to link individual measures of life time earnings for three generation and data on educational attainments of four generations. We first do conventional regressions and transition matrices for life time earnings measures and educational attainments adding variables for the grandparent and great grandparent generations, respectively. We find that grandparents and even great grandparents significantly influence earnings and education. We then estimate the so called Becker-Tomes model using the educational attainment of the great grandparent generation as an instrumental variable. We fail to find support for the model’s predictions.

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Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2012:1.

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Length: 27 pages
Date of creation: 18 Dec 2011
Date of revision:
Handle: RePEc:hhs:sunrpe:2012_0001
Contact details of provider: Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
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Fax: +46 8 16 14 25
Web page: http://www.ne.su.se/
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  1. Mårten Palme & Sofia Sandgren, 2008. "Parental Income, Lifetime Income, and Mortality," Journal of the European Economic Association, MIT Press, vol. 6(4), pages 890-911, 06.
  2. Chul-In Lee & Gary Solon, 2009. "Trends in Intergenerational Income Mobility," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 766-772, November.
  3. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  4. Björklund, Anders & Lindahl, Mikael & Plug, Erik, 2005. "The Origins of Intergenerational Associations: Lessons from Swedish Adoption Data," IZA Discussion Papers 1739, Institute for the Study of Labor (IZA).
  5. Gary S. Becker & Kevin M. Murphy & Robert Tamura, . "Human Capital, Fertility, and Economic Growth," University of Chicago - Population Research Center 90-5a, Chicago - Population Research Center.
  6. Bruce Sacerdote, 2004. "What Happens When We Randomly Assign Children to Families?," NBER Working Papers 10894, National Bureau of Economic Research, Inc.
  7. Black, Sandra E. & Devereux, Paul J., 2010. "Recent Developments in Intergenerational Mobility," IZA Discussion Papers 4866, Institute for the Study of Labor (IZA).
  8. Costas Meghir & Mårten Palme, 2004. "Educational reform, ability and family background," IFS Working Papers W04/10, Institute for Fiscal Studies.
  9. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2005. "The More the Merrier? The Effect of Family Size and Birth Order on Children's Education," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 669-700, May.
  10. Helena Holmlund & Mikael Lindahl & Erik Plug, 2011. "The Causal Effect of Parents' Schooling on Children's Schooling: A Comparison of Estimation Methods," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 615-51, September.
  11. Steven Haider & Gary Solon, 2006. "Life-Cycle Variation in the Association between Current and Lifetime Earnings," NBER Working Papers 11943, National Bureau of Economic Research, Inc.
  12. Sáez-Martí, María & Sjögren, Anna, 2005. "Peers and Culture," Working Paper Series 642, Research Institute of Industrial Economics.
  13. Björklund, Anders & Jäntti, Markus & Lindquist, Matthew J., 2009. "Family background and income during the rise of the welfare state: Brother correlations in income for Swedish men born 1932-1968," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 671-680, June.
  14. 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.
  15. Erik Plug & Wim Vijverberg, 2005. "Does Family Income Matter for Schooling Outcomes? Using Adoptees as a Natural Experiment," Economic Journal, Royal Economic Society, vol. 115(506), pages 879-906, October.
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