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What Is The Source Of The Intergenerational Correlation In Earnings?

Author

Listed:
  • Mehmet Soytas

    (Ozyegin University)

  • Limor Golan

    (Washington University in St. Louis)

  • George-Levi Gayle

    (Washington Unversity in St. Louis)

Abstract

This paper uses a dynastic model of household behavior to estimate and decomposed the correlations in earnings across generations. The estimate model can explain 75% to 80 %of the observed correlation in lifetime earnings between fathers and sons, mothers and daughters, and families across generations. The main results are that the family and division of labor within the household are the main source of the correlation across generation and not just assorting mating. The interaction of human capital accumulation in labor market, the nonlinear return to part-time versus full-time work, and the return parental time investment in children are the main driving force behind the intergenerational correlation in earnings and assortative mating just magnify these forces.

Suggested Citation

  • Mehmet Soytas & Limor Golan & George-Levi Gayle, 2016. "What Is The Source Of The Intergenerational Correlation In Earnings?," 2016 Meeting Papers 387, Society for Economic Dynamics.
  • Handle: RePEc:red:sed016:387
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. David de la Croix & Aude Pommeret, 2017. "Childbearing Postponement, its Option Value, and the Biological Clock," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2017016, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. Musab Kurnaz & Mehmet Soytas, 2019. "Early Childhood Investment and Income Taxation," 2019 Meeting Papers 290, Society for Economic Dynamics.
    3. Teodora Boneva & Christopher Rauh, 2018. "Parental Beliefs about Returns to Educational Investments—The Later the Better?," Journal of the European Economic Association, European Economic Association, vol. 16(6), pages 1669-1711.
    4. Uta Bolt & Eric French & Jamie Hentall Maccuish & Cormac O’Dea, 2018. "Intergenerational Altruism and Transfers of Time and Money: A Life-cycle Perspective," Working Papers wp379, University of Michigan, Michigan Retirement Research Center.
    5. Conti, Gabriella & Mason, Giacomo & Poupakis, Stavros, 2019. "Developmental Origins of Health Inequality," IZA Discussion Papers 12448, Institute of Labor Economics (IZA).
    6. George‐Levi Gayle & Limor Golan & Mehmet A. Soytas, 2018. "Estimation of dynastic life‐cycle discrete choice models," Quantitative Economics, Econometric Society, vol. 9(3), pages 1195-1241, November.
    7. Emily Moschini, 2019. "Child Care Subsidies with One- and Two-Parent Families," 2019 Meeting Papers 42, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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