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How do education, cognitive skills, cultural and social capital account for intergenerational earnings persistence? Evidence from the Netherlands

Listed author(s):
  • Büchner Charlotte
  • Cörvers Frank
  • Traag Tanja
  • Velden Rolf van der

    (ROA rm)

This study analyzes four different transmission mechanisms, through which father’searnings affect son’s earnings: the educational attainment, cognitive skills, the culturalcapital of the family and the social capital in the neighborhood. Using a unique dataset that combines panel data from a birth cohort with earnings data from a largenationwide income survey and national tax files, our findings show that cognitive skillsand schooling of the son account for 50% of the father-son earnings elasticity. Educationby far accounts for the largest part, while cognitive skills mainly work indirectly througheducational attainment. Social capital of the neighborhood and cultural capital of theparents account for an additional 6% of the intergeneration income persistence. Fromthese two additional mechanisms, social capital appears to play a stronger role than thecultural capital of the parents. This means that 44% of the intergenerational persistenceis due to other unobserved characteristics for example personality traits or spillovereffects of family assets.

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File URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:edf4b368-40c2-469f-bf83-5a9f0252378d/datastreams/ASSET1/content
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Paper provided by Maastricht University, Research Centre for Education and the Labour Market (ROA) in its series ROA Research Memorandum with number 007.

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Date of creation: 2012
Handle: RePEc:unm:umaror:2012007
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  1. Grawe, Nathan D., 2003. "Life Cycle Bias in the Estimation of Intergenerational Earnings Persistence," Analytical Studies Branch Research Paper Series 2003207e, Statistics Canada, Analytical Studies Branch.
  2. Lorraine Dearden & Stephen Machin & Howard Reed, 1995. "Intergenerational mobility in Britain," IFS Working Papers W95/20, Institute for Fiscal Studies.
  3. Corak, Miles & Heisz, Andrew, 1998. "The Intergenerational Earnings and Income Mobility of Canadian Men: Evidence from Longitudinal Income Tax Data," Analytical Studies Branch Research Paper Series 1998113e, Statistics Canada, Analytical Studies Branch.
  4. Jo Blanden, 2009. "How much can we learn from international comparisons of intergenerational mobility?," LSE Research Online Documents on Economics 28283, London School of Economics and Political Science, LSE Library.
  5. Eric A. Hanushek & Ludger Woessmann, 2005. "Does Educational Tracking Affect Performance and Inequality? Differences-in-Differences Evidence across Countries," CESifo Working Paper Series 1415, CESifo Group Munich.
  6. Nybom, Martin & Stuhler, Jan, 2011. "Heterogeneous Income Profiles and Life-Cycle Bias in Intergenerational Mobility Estimation," IZA Discussion Papers 5697, Institute for the Study of Labor (IZA).
  7. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
  8. Jo Blanden & Paul Gregg & Lindsey Macmillan, 2007. "Accounting for Intergenerational Income Persistence: Noncognitive Skills, Ability and Education," Economic Journal, Royal Economic Society, vol. 117(519), pages 43-60, 03.
  9. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," NBER Working Papers 12006, National Bureau of Economic Research, Inc.
  10. Grawe, Nathan D., 2006. "Lifecycle bias in estimates of intergenerational earnings persistence," Labour Economics, Elsevier, vol. 13(5), pages 551-570, October.
  11. Gary Solon, 2002. "Cross-Country Differences in Intergenerational Earnings Mobility," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 59-66, Summer.
  12. James E. Rauch, 1991. "Productivity Gains From Geographic Concentration of human Capital: Evidence From the Cities," NBER Working Papers 3905, National Bureau of Economic Research, Inc.
  13. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-1189, December.
  14. Corak, Miles, 2006. "Do Poor Children Become Poor Adults? Lessons from a Cross Country Comparison of Generational Earnings Mobility," IZA Discussion Papers 1993, Institute for the Study of Labor (IZA).
  15. Bjorklund, Anders & Jantti, Markus, 1997. "Intergenerational Income Mobility in Sweden Compared to the United States," American Economic Review, American Economic Association, vol. 87(5), pages 1009-1018, December.
  16. Lindh, Thomas & Ohlsson, Henry, 1996. "Self-Employment and Windfall Gains: Evidence from the Swedish Lottery," Economic Journal, Royal Economic Society, vol. 106(439), pages 1515-1526, November.
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