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Heterogenous latent factor models using horizontal kinship

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Abstract

We reconstruct the genealogical tree of all individuals ever appearing in Dutch municipalities records since 1995. Using microdata from tax authorities, we compute a measure of their permanent earnings and assess the degree to which the intergenerational transmission process is heterogeneous. Our analysis relies on traditional estimates as well as model assuming a latent transmission of family endowments. In both cases, we show that offspring born into families belonging to the lowest percentiles of the income distribution show a higher degree of intergenerational persistence. The same applies when looking at heterogeneity in intergenerational mobility along the grandparental wealth, potentially suggesting the existence of poverty traps.

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  • Colagrossi, Marco & Deiana, Claudio & Geraci, Andrea & Giua, Ludovica & Mazzarella, Gianluca, 2024. "Heterogenous latent factor models using horizontal kinship," JRC Working Papers in Economics and Finance 2024-01, Joint Research Centre, European Commission.
    • Handle: RePEc:jrs:wpaper:202401
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC138568
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    Keywords

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    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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