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Relationships Among the Family Incomes and Labor Market Outcomes of Relatives

  • Joseph G. Altonji
  • Thomas A. Dunn

This paper examines the links between the labor market outcomes of individuals who are related by blood or by marriage using panel data on pairs of matched family members from the National Longitudinal Survey of Labor Market Experience. We examine the intergenerational and sibling correlations among a broad set of labor market variables using time average, method of moments and regression techniques designed to reduce the biases introduced by transitory and measurement errors. We also show that family data can be exploited to investigate theories of job turnover, labor supply. and the industry structure of wages. Our primary findings follow. First, there are strong correlations between the family incomes of relatives. Our method of moments estimates are .38 for brother pairs, .73 for sister pairs. and .56 for brother-sister pairs. The intergenerational family income correlations are .36 for father-son pairs, .48 for father-daughter pairs, and .56 for both mother-son and mother-daughter pairs. These estimates. except for the father-son result, are large compared to those in the literature for the U.S. Second, we find strong correlations in the wages and earnings of relatives. Wage correlations vary around .40 for all family member pairs, and earnings correlations vary around .35. Work hours of family members of the same sex are also fairly strongly related. Fourth, we find strong correlations in the earnings of "in-laws" that may support a theory of assortive mating in which parental earnings have value. We also provide evidence that job turnover rates depend on family characteristics and are negatively correlated with labor market productivity. Further, we show that young men whose fathers work in high wage industries tend themselves to work in high wage industries. Lastly, we find that a father's collective bargaining coverage has a strong positive influence on his son's collective bargaining status.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3724.

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Date of creation: Jun 1991
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Publication status: published as Research in Labor Economics, 12(1991) 269-310
Handle: RePEc:nbr:nberwo:3724
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  1. Behrman, Jere R & Taubman, Paul, 1990. "The Intergenerational Correlation between Children's Adult Earnings and Their Parents' Income: Result from the Michigan Panel Survey of Income Dynamics," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 36(2), pages 115-27, June.
  2. 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.
  3. John Ballen & Richard B. Freeman, 1986. "Transitions between Employment and Nonemployment," NBER Chapters, in: The Black Youth Employment Crisis, pages 75-114 National Bureau of Economic Research, Inc.
  4. Behrman, Jere & Tarbman, Paul, 1985. "Intergenerational Earnings Mobility in the United States: Some Estimates and a Test of Becker's Intergenerational Endowments Model," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 144-51, February.
  5. Blakemore, Arthur E & Hunt, Janet C & Kiker, B F, 1986. "Collective Bargaining and Union Membership Effects on the Wages of Male Youths," Journal of Labor Economics, University of Chicago Press, vol. 4(2), pages 193-211, April.
  6. Altonji, Joseph G. & Martins, Ana Paula & Siow, Aloysius, 2002. "Dynamic factor models of consumption, hours and income," Research in Economics, Elsevier, vol. 56(1), pages 3-59, June.
  7. Kearl, J R & Pope, Clayne L, 1986. "Unobservable Family and Individual Contributions to the Distributionsof Income and Wealth," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S48-79, July.
  8. Solon, Gary, 1989. "Biases in the Estimation of Intergenerational Earnings Correlations," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 172-74, February.
  9. Behrman, Jere R & Taubman, Paul, 1989. "Is Schooling "Mostly in the Genes"? Nature-N urture Decomposition Using Data on Relatives," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1425-46, December.
  10. Mary Corcoran & Roger H. Gordon & Deborah Laren & Gary Solon, 1989. "Effects of Family and Community Background on Men's Economic Status," NBER Working Papers 2896, National Bureau of Economic Research, Inc.
  11. Bound, John & Griliches, Zvi & Hall, Bronwyn H, 1986. "Wages, Schooling and IQ of Brothers and Sisters: Do the Family Factors Differ?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 77-105, February.
  12. MaCurdy, Thomas E., 1982. "The use of time series processes to model the error structure of earnings in a longitudinal data analysis," Journal of Econometrics, Elsevier, vol. 18(1), pages 83-114, January.
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