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Matching for Social Mobility with Unobserved Heritable Characteristics

Author

Listed:
  • Chris Bidner

    (Simon Fraser University)

  • John Knowles

    (Simon Fraser University)

Abstract

We analyse the intergenerational transmission of ‘innate ability’, focusing on the role of marital sorting. The heritability of ability induces a concern for the ability of potential spouses independently of a concern for their earning capacity. Marriages form on the basis of beliefs about ability (since it is not observed) as well earning capacity (which is observed). Beliefs are informed by earning capacity, but crucially also by family background. We show how the intergenerational transmission of ability becomes sensitive to elements of the economic environment once marital sorting is endogenously determined, but also that policy variables (e.g. income redistribution) generally have no impact. The analysis also reveals a novel ‘status motive’ for parental investment and channel through which the fortunes of grandparents and prior generations persist.

Suggested Citation

  • Chris Bidner & John Knowles, 2018. "Matching for Social Mobility with Unobserved Heritable Characteristics," Discussion Papers dp18-05, Department of Economics, Simon Fraser University.
  • Handle: RePEc:sfu:sfudps:dp18-05
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    More about this item

    Keywords

    Family Economics; Inequality; Household Formation; Marriage;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D19 - Microeconomics - - Household Behavior - - - Other
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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