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Consumption and Income Persistence across Generations

Author

Listed:
  • Hamish Low

    (University of Cambridge)

  • Aruni Mitra

    (University of British Columbia)

  • Giovanni Gallipoli

    (UBC)

Abstract

We examine the persistence of economic outcomes within families. First, we link parents and children in U.S. longitudinal data and document the cross-generational association in both incomes and ex- penditures. Next, we develop a richer model of intra-family persistence and derive a set of theoretical moment restrictions. This allows us to identify and estimate key parameters describing how different shocks influence long-term economic outcomes. We use these estimates to quantify the contribution of parental factors to the observed dispersion of income and consumption among adult children.

Suggested Citation

  • Hamish Low & Aruni Mitra & Giovanni Gallipoli, 2017. "Consumption and Income Persistence across Generations," 2017 Meeting Papers 1215, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:1215
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    File URL: https://economicdynamics.org/meetpapers/2017/paper_1215.pdf
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    References listed on IDEAS

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    1. Rasmus Landersø & James J. Heckman, 2017. "The Scandinavian Fantasy: The Sources of Intergenerational Mobility in Denmark and the US," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(1), pages 178-230, January.
    2. Lars Lefgren & Matthew J. Lindquist & David Sims, 2012. "Rich Dad, Smart Dad: Decomposing the Intergenerational Transmission of Income," Journal of Political Economy, University of Chicago Press, vol. 120(2), pages 268-303.
    3. Patricia Andreski & Geng Li & Mehmet Zahid Samancioglu & Robert Schoeni, 2014. "Estimates of Annual Consumption Expenditures and Its Major Components in the PSID in Comparison to the CE," American Economic Review, American Economic Association, vol. 104(5), pages 132-135, May.
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