IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/4950.html
   My bibliography  Save this paper

An Intergenerational Model of Wages, Hours and Earnings

Author

Listed:
  • Joseph G. Altonji
  • Thomas A. Dunn

Abstract

In this paper we develop and estimate a factor model of the earnings, labor supply, and wages of young men and young women, their parents and their siblings. We estimate the model using data on matched sibling and parent-child pairs from the National Longitudinal Survey of Labor Market Experience. We measure the extent to which a set of unobserved parental and family factors that drive wage rates and work hours independently of wage rates lead to similarities among family members in labor market outcomes. We find strong family similarities in work hours that run along gender lines. These similarities are primarily due to preferences rather than to labor supply responses to family similarities in wages. The wage factors of the father and mother influence the wages of both sons and daughters. A `sibling' wage factor also plays an important role in wage determination. We find that intergenerational correlations in wages substantially overestimate the direct influence of fathers, and especially mothers, on wages. This is because the father's and mother's wage factors are positively correlated. The relative importance for the variance in earnings of the direct effect of wages, the labor supply response induced by wages, and effect of hours preferences varies by gender, and by age in the case of women. For all groups most of the effect of wages on earnings is direct rather than through a labor supply response.

Suggested Citation

  • Joseph G. Altonji & Thomas A. Dunn, 1994. "An Intergenerational Model of Wages, Hours and Earnings," NBER Working Papers 4950, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4950
    Note: LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w4950.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mincer, Jacob & Polachek, Solomon, 1974. "Family Investment in Human Capital: Earnings of Women," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 76-108, Part II, .
    2. Paula England, 1982. "The Failure of Human Capital Theory to Explain Occupational Sex Segregation," Journal of Human Resources, University of Wisconsin Press, vol. 17(3), pages 358-370.
    3. Hauser, Robert M & Sewell, William H, 1986. "Family Effects in Simple Models of Education, Occupational Status and," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 83-115, July.
    4. 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 1425-1446, December.
    5. 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, Third Edition, pages 257-298, National Bureau of Economic Research, Inc.
    6. Mroz, Thomas A, 1987. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, Econometric Society, vol. 55(4), pages 765-799, July.
    7. Jere R. Behrman & Paul Taubman, 1990. "The Intergenerational Correlation Between Children'S Adult Earnings And Their Parents' Income: Results 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 115-127, June.
    8. Joseph G. Altonji & Thomas A. Dunn, 1991. "Relationships Among the Family Incomes and Labor Market Outcomes of Relatives," NBER Working Papers 3724, National Bureau of Economic Research, Inc.
    9. Griliches, Zvi, 1979. "Sibling Models and Data in Economics: Beginnings of a Survey," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 37-64, October.
    10. Blakemore, Arthur E & Low, Stuart A, 1984. "Sex Differences in Occupational Selection: The Case of College Majors," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 157-163, February.
    11. 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 115-127, June.
    12. Solomon William Polachek, 1978. "Sex Differences in College Major," ILR Review, Cornell University, ILR School, vol. 31(4), pages 498-508, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anna Christina D'Addio, 2007. "Intergenerational Transmission of Disadvantage: Mobility or Immobility Across Generations?," OECD Social, Employment and Migration Working Papers 52, OECD Publishing.
    2. Dalton Conley & Rebecca Glauber, 2007. "Family Background, Race, and Labor Market Inequality," The ANNALS of the American Academy of Political and Social Science, , vol. 609(1), pages 134-152, January.
    3. Ramses H. ABUL NAGA, 1998. "Estimating the Intergenerational Correlation of Incomes : An Errors in Variables Framework," Cahiers de Recherches Economiques du Département d'économie 9812, Université de Lausanne, Faculté des HEC, Département d’économie.
    4. Couch, Kenneth A. & Lillard, Dean R., 1998. "Sample selection rules and the intergenerational correlation of earnings," Labour Economics, Elsevier, vol. 5(3), pages 313-329, September.
    5. Grossmann, Volker, 2008. "Risky human capital investment, income distribution, and macroeconomic dynamics," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 19-42, March.
    6. Nancy Birdsall & Jere R. Behrman & Miguel Székely, 1998. "Movilidad de la enseñanza intergeneracional y condiciones macro y políticas de enseñanza en América Latina," Research Department Publications 4145, Inter-American Development Bank, Research Department.
    7. Brown, Charles & Corcoran, Mary, 1997. "Sex-Based Differences in School Content and the Male-Female Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 431-465, July.
    8. Sonia Bhalotra & Samantha Rawlings, 2013. "Gradients of the Intergenerational Transmission of Health in Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 660-672, May.
    9. Jere R. Behrman & Alejandro Gaviria & Miguel Székely, 2001. "Intergenerational Mobility in Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2001), pages 1-44, August.
    10. Ng, Irene Y.H. & Shen, Xiaoyi & Ho, Kong Weng, 2009. "Intergenerational earnings mobility in Singapore and the United States," Journal of Asian Economics, Elsevier, vol. 20(2), pages 110-119, March.
    11. Quisumbing, Agnes R., 1995. "The extended family and intrahousehold allocation," FCND discussion papers 3, International Food Policy Research Institute (IFPRI).
    12. Janet Currie, 2004. "Viewpoint: Child research comes of age," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(3), pages 509-527, August.
    13. Andreas Waldkirch & Serena Ng & Donald Cox, 2004. "Intergenerational Linkages in Consumption Behavior," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    14. Polachek, Solomon W., 2008. "Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(3), pages 165-272, April.
    15. Bernt Bratsberg & Knut Røed & Oddbjørn Raaum & Robin Naylor & Markus Ja¨ntti & Tor Eriksson & Eva O¨sterbacka, 2007. "Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons," Economic Journal, Royal Economic Society, vol. 117(519), pages 72-92, March.
    16. Ramses H. ABUL NAGA, 2000. "Galtonian Regression of Intergenerational Income Linkages : Biased Procedures, a New Estimator and Mean-Square Error Comparisons," Cahiers de Recherches Economiques du Département d'économie 00.13, Université de Lausanne, Faculté des HEC, Département d’économie.
    17. Yang-Ming Chang, 2012. "Strategic transfers, redistributive fiscal policies, and family bonds: a micro-economic analysis," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(4), pages 1481-1502, October.
    18. Miles Corak & Andrew Heisz, 1999. "The Intergenerational Earnings and Income Mobility of Canadian Men: Evidence from Longitudinal Income Tax Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 504-533.
    19. Nathan D. Grawe, 2010. "Primary and Secondary School Quality and Intergenerational Earnings Mobility," Journal of Human Capital, University of Chicago Press, vol. 4(4), pages 331-364.
    20. Nancy Birdsall & Jere R. Behrman & Miguel Székely, 1998. "Intergenerational Schooling Mobility and Macro Conditions and Schooling Policies in Latin America," Research Department Publications 4144, Inter-American Development Bank, Research Department.

    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:4950. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.