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Intergenerational mobility and the timing of parental income

Author

Listed:
  • Pedro Carneiro

    () (Institute for Fiscal Studies and University College London)

  • Italo Lopez Garcia

    (Institute for Fiscal Studies)

  • Kjell G. Salvanes

    () (Institute for Fiscal Studies and Norwegian School of Economics)

  • Emma Tominey

    () (Institute for Fiscal Studies and University of York)

Abstract

We extend the standard intergenerational mobility literature by modelling individual outcomes as a function of the whole history of parental income, using data from Norway. We find that, conditional on permanent income, education is maximized when income is balanced between the early childhood and middle childhood years. In addition, there is an advantage to having income occur in late adolescence rather than in early childhood. These result are consistent with a model of parental investments in children with multiple periods of childhood, income shocks, imperfect insurance, dynamic complementarity and uncertainty about the production function and the ability of the child.

Suggested Citation

  • Pedro Carneiro & Italo Lopez Garcia & Kjell G. Salvanes & Emma Tominey, 2015. "Intergenerational mobility and the timing of parental income," CeMMAP working papers CWP66/15, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:cemmap:66/15
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    References listed on IDEAS

    as
    1. Björklund, Anders & Salvanes, Kjell G., 2011. "Education and Family Background: Mechanisms and Policies," Handbook of the Economics of Education, Elsevier.
    2. James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
    3. Solon, Gary, 1999. "Intergenerational mobility in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 29, pages 1761-1800 Elsevier.
    4. Maria Humlum, 2011. "Timing of family income, borrowing constraints, and child achievement," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(3), pages 979-1004, July.
    5. Elizabeth M. Caucutt & Lance Lochner, 2012. "Early and Late Human Capital Investments, Borrowing Constraints, and the Family," NBER Working Papers 18493, National Bureau of Economic Research, Inc.
    6. Pedro Carneiro & Katrine V. Løken & Kjell G. Salvanes, 2015. "A Flying Start? Maternity Leave Benefits and Long-Run Outcomes of Children," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 365-412.
    7. Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, May.
    8. Sherry Glied & Adriana Lleras-Muney, 2008. "Technological innovation and inequality in health," Demography, Springer;Population Association of America (PAA), vol. 45(3), pages 741-761, August.
    9. Dan Maurice Levy & Greg Duncan, 2000. "Using Sibling Samples to Assess the Effect of Childhood Family Income on Completed Schooling," JCPR Working Papers 168, Northwestern University/University of Chicago Joint Center for Poverty Research.
    10. Black, Sandra E. & Devereux, Paul J., 2011. "Recent Developments in Intergenerational Mobility," Handbook of Labor Economics, Elsevier.
    11. Jenkins, Stephen P. & Schluter, Christian, 2002. "The Effect of Family Income During Childhood on Later-Life Attainment: Evidence from Germany," IZA Discussion Papers 604, Institute for the Study of Labor (IZA).
    12. Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1997. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1121-1166, December.
    13. Anna Aizer & Laura Stroud, 2010. "Education, Knowledge and the Evolution of Disparities in Health," NBER Working Papers 15840, National Bureau of Economic Research, Inc.
    14. Flávio Cunha & Irma Elo & Jennifer Culhane, 2013. "Eliciting Maternal Expectations about the Technology of Cognitive Skill Formation," NBER Working Papers 19144, National Bureau of Economic Research, Inc.
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    Cited by:

    1. James J. Heckman & Stefano Mosso, 2014. "The Economics of Human Development and Social Mobility," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 689-733, August.
    2. Cheti Nicoletti & Kjell G. Salvanes & Emma Tominey, 2016. "The Family Peer Effect on Mothers' Labour Supply," Discussion Papers 16/04, Department of Economics, University of York.
    3. Francesconi, Marco & Heckman, James J., 2016. "Symposium on Child Development and Parental Investment: Introduction," IZA Discussion Papers 9977, Institute for the Study of Labor (IZA).
    4. Francesconi, Marco & Heckman, James J, 2015. "Symposium on Child Development and Parental Investment: Introduction," Economics Discussion Papers 16868, University of Essex, Department of Economics.
    5. Elizabeth M. Caucutt & Lance Lochner, 2012. "Early and Late Human Capital Investments, Borrowing Constraints, and the Family," NBER Working Papers 18493, National Bureau of Economic Research, Inc.
    6. Orazio Attanasio & Costas Meghir & Emily Nix, 2015. "Human Capital Development and Parental Investment in India," Cowles Foundation Discussion Papers 2026R, Cowles Foundation for Research in Economics, Yale University, revised Jul 2017.
    7. Boserup, Simon H. & Kopczuk, Wojciech & Kreiner, Claus T., 2016. "Born with a silver spoon? Danish evidence on wealth inequality in childhood," CEPR Discussion Papers 11490, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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