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Family, Community and Long-Term Earnings Inequality

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  • Paul Bingley
  • Lorenzo Cappellari
  • Konstantinos Tatsiramos

Abstract

Correlations between the earnings of siblings reflect shared family and community background, but evidence is mixed on the relative magnitudes of these influences. Using administrative data on the Danish population we link brothers, schoolmates and teenage neighbors and estimate a model of multiple group earnings dynamics to measure jointly the relative importance of family, neighborhoods and schools for long-term earnings. We find that: (1) family is by far the most relevant factor; (2) the influence of neighborhoods and schools falls rapidly, becoming insignificant by age 30; and (3) community effects are persistent and upward biased by a factor of five if family effects are ignored.

Suggested Citation

  • Paul Bingley & Lorenzo Cappellari & Konstantinos Tatsiramos, 2016. "Family, Community and Long-Term Earnings Inequality," Discussion Papers 2016-01, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:16/01
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    More about this item

    Keywords

    Sibling correlations; Neighbourhoods; Schools; Life-cycle earnings; Inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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