The Intergenerational Transmission of Lifetime Earnings: Evidence from Brazil

Abstract

Abstract This paper uses unique household survey data from Brazil and recently developed econometric techniques to estimate the transmission of lifetime earnings in Brazil and to examine effects of earnings measurement on estimates of intergenerational mobility. The level of intergenerational earnings transmission in Brazil is estimated to be among the highest observed for any country. Observations of earnings across the life-cycles of fathers and sons are used to form estimates of the transmission of lifetime earnings and to study life-cycle measurement effects on earnings transmission estimates. The use of earnings of relatively young sons, common in previous studies, is found to underestimate the true level of transmission of lifetime earnings. This paper provides two methods to obtain improved measures of lifetime earnings transmission. This paper also finds that education may be the most significant pathway by which earnings are transmitted intergenerationally.