Dynastic Model Research Articles

Optimal parental leave subsidization with endogenous fertility and growth

AbstractWe examine the growth and welfare effects of parental leave subsidization in a life‐cycle dynastic model with human capital externality. Such externality causes higher fertility, less parental time and expenditure on child human capital, and lower growth and welfare than the efficient levels. Efficient policies require subsidizing work leave, which includes parental leave, and labor income financed by a lump‐sum tax. Calibration based on the U.S. data implies that a fully‐covered leave duration of 7.8 weeks per parent financed by an increase in labor income tax would increase the annual growth rate by 0.06 percentage points and welfare by 0.027%.

What is the source of the intergenerational correlation in earnings?

We use a dynastic model of household behavior to estimate and decompose the correlations in earnings across generations. The estimated model can explain 75% to 80% of the observed correlation in lifetime earnings between fathers and sons, mothers and daughters, and families across generations. We find that human-capital accumulation in the labor market, the nonlinear return to part-versus full-time work, and the return to parental time investment in children are the main forces driving the intergenerational correlation in earnings. The primary mechanism through which these three sources affect the intergenerational correlation in earnings is their effects on fertility and the division of labor within the household. Assortative mating magnifies these forces.

Gender Aspects of Reproduction of Professional Dynasties in Medicine

The number of female health workers is predominant in the current health care system. However, in terms of the distribution of power and authority, career trajectories, and the culture of relationships, medicine still remains gender-related to men. Reproduction processes of the professional structure of medicine, in which professional dynasties occupy a special place, is also marked by gender differences. Thus, the article addresses the gender specificities of the institutional reproduction of medical dynasties in modern Russia. Based on in-depth interviews with twenty representatives of multigenerational families of doctors from ten cities, gender scenarios for the transmission of professional positions and the gender specificity of using the social and symbolic capital of the dynasty in the context of their reproduction are analyzed. According to the empirical research findings, the dynastic model of marital status transfer maintains and reproduces gender inequality in the medical profession. There is low gender sensitivity in doctors’ dynasties, where women are more likely to be passive or under family pressure to pursue educational and work tracks. The choice of professional specialization is conditioned by gender stereotypes. Career and professional opportunities of women doctors are limited by an imbalance between work and home responsibilities. Dynasty social and symbolic capital investment strategies are less resourceful for women in clinical practice and more effective in academic medicine. The deconstruction of the traditional gender display in the profession is proceeding at a slow pace, while medical dynasties continue to rather reproduce the inequality and male ethics of the medical profession.

On a Theoretical Analysis of the Family and Economic Growth

The paper considers the prospects of constructing theoretical postulates on the family that is consistent with some of the main features of economic growth. Theoretical abstraction of the parameters involved based on the intergenerational dynastic model is analyzed and compared to evidence. Descriptive and analytical technique were employed in analyzing the model. Nonmarket productivity levels and their effect on initial human capital endowment of households were also considered.

Intergenerational Income Mobility and Income Taxation

We study the impact of income taxation on intergenerational income correlation. We estimate a life cycle dynastic model and conduct counterfactual analysis to observe the effects of various tax regimes. Compared to a no tax environment, a flat tax regime reduces the correlation only by one percentage points. If the flat tax regime provides child benefits, the correlation additionally declines by four percentage points. Finally, if the taxes are progressive, the reduction, which is due to the increase in the fertility rate (quantity) and the decrease in the educational outcome of children (quality), is highly significant (seven percentage points).

The Elasticity of Intergenerational Substitution, Parental Altruism, and Fertility Choice

Abstract Dynastic models common in macroeconomics use a single parameter to control the willingness of individuals to substitute consumption both intertemporally, or across periods, and intergenerationally, or across parents and their children. This article defines the concept of elasticity of intergenerational substitution (EGS), and extends a standard dynastic model in order to disentangle the EGS from the EIS, or elasticity of intertemporal substitution. A calibrated version of the model lends strong support to the notion that the EGS is significantly larger than one. In contrast, estimates of the EIS suggests that it is at most one. What disciplines the identification is the need to match empirically plausible fertility rates for the U.S. We illustrate the potential role of the EGS in macroeconomics.

Social Welfare, Parental Altruism and Inequality

I discuss two alternative notions of social welfare (utilitarian and self- enforcing) in a dynastic model with heterogeneous and persistent degrees of parental altruism and evaluate the implied levels of consumption inequality. Then, I study a decentralization of planning optima in a competitive equilibrium where the only source of inequality arises from intergenerational wealth transmission and I show that the self-enforcing criterion implies a negative tax rate on the less altruistic individuals’ capital income.

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On the Optimal Progressivity of Higher Education Subsidies: The Role of Endogenous Fertility

I develop a simple dynastic model in the style of Barro and Becker, with endogenous fertility and human capital accumulation, to quantify the optimal progressivity of higher education subsidies. I find that the optimal policy is characterised by a higher degree of progressivity than current U.S. education subsidies. Additionally, the relation between progressivity of education policy and welfare/population growth is hump-/U-shaped respectively. While an assumption of endogenous fertility is quantitatively important, heterogeneity in fertilities is sufficient to generate these results. This is because welfare gains from more progressive subsidies are driven not only by decreases in fertility rates of low income individuals, but also by the fact that their children transit to states associated with higher incomes and, consequently, relatively low fertilities.

Estimation of dynastic life-cycle discrete choice models

Dynastic models have long provided a framework for the study of equilibria with intergenerational transfers, social mobility, and inequality. However with a few exceptions, there has been very little work on the estimations of these models. With the advent of data sets like the PSID that tracks households over more than one generation estimation of these models are now feasible. This paper explores the estimation of a class of life-cycle discrete choice intergenerational models. It proposes a new semiparametric estimation technique that circumvents the need for full solution of the dynamic programming problem. As is standard in this class of estimators, we show that it is p N consistent and asymptotically normally distributed. We compare our estimator to a modified version of the full solution maximum likelihood estimator in a Monte Carlo study. Our estimator performs comparable to ML in finite sample but greatly reduces the computational cost. To demonstrate the applicability of the estimator, a dynastic model of intergenerational transmission of human capital with unitary households is estimated. (Preliminary and Incomplete)

Intergenerational Altruism and Transfers of Time and Money: A Life-Cycle Perspective

Parental investments in children can take one of three broad forms: (1) Time investments during child-hood and adolescence that aid child development, and in particular cognitive ability (2) Educational investments that improve school quality and hence educational outcomes (3) Cash investments in the form of inter-vivos transfers and bequests. We develop a dynastic model of household decision making with intergenerational altruism that nests a child production function, incorporates all three of these types of investments, and allows us to quantify their relative importance and estimate the strength of intergenerational altruism. Using British cohort data that follows individuals from birth to retirement, we fnd that around 40% of differences in average lifetime income by paternal education are explained by ability at age 7, around 40% by subsequent divergence in ability and different educational outcomes, and around 20% by inter-vivos transfers and bequests received so far.

Intergenerational correlation and social interactions in education

We propose a dynastic model where individuals are born into an educated or uneducated environment that they inherit from their parents. We study the impact of social interactions on the correlation in parent-child educational status, independently of any parent-child interaction. When the level of social interactions is decided by a social planner, we show that the correlation in education status between generations decreases very fast as social interactions increase. In turn, when the level of social interactions is decided by the individuals themselves, we show that the intergenerational correlation still decreases, although less rapidly than with exogenous social interactions.

Baby busts and baby booms: The fertility response to shocks in dynastic models

While there has been a substantial effort to understand the Demographic Transition alongside the transition to sustained economic growth, fertility fluctuations have not been analyzed in the business cycle literature. This paper builds a model of fertility choice with dynastic altruism, age-structured population and aggregate productivity shocks. We show that, under reasonable parameter values, fertility is pro-cyclical and that, following a shock, fertility continues to cycle. Applied to the U.S. experience in the 20th century, the Great Depression generates a baby bust of 58% of that seen in the U.S. in the 1930s, followed by a Baby Boom of 77% of that seen in the U.S. in the 1950s. As observed in U.S. estate data, the model predicts that small cohorts receive relatively large per child transfers from parents. Finally, statistical analysis across countries in the 1930s and 1950s further supports our theory.

Looking again at Taiwan's Lü Hsiu-lien: A female vice president or a feminist vice president?

Synopsis In 2000, Lu Hsiu-lien was elected Taiwan's first female vice president, adding to the striking successes of Asian women in electoral politics. Lu differs from the majority of Asia's “ruling women” in two key respects: she was elected without reliance on “dynastic descent” and she has a long track record as a feminist activist. Her position as both a pioneering feminist and a female vice president prompts us to ask whether she was able to promote a pro-woman agenda during her tenure as vice president. We conclude that despite constraints on Lu's pursuit of an overt feminist agenda—including the patriarchal political culture and a gap between Lu and Taiwan's contemporary feminist movement—she is significant as a female leader who transcends both the Asian dynastic model and the tokenistic model of women as “flower vases,” while also contributing vitally to the development of an indigenous Taiwanese feminist theory.

What is the Source of the Intergenerational Correlation in Earnings?

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.

Estimation of Dynastic Life-Cycle Discrete Choice Models

This paper explores the estimation of a class of life-cycle discrete choice intergenerational models. It proposes a new semiparametric estimator. It shows that it is root-N-consistent and asymptotically normally distributed. We compare our estimator with a modified version of the full solution maximum likelihood estimator (MLE) in a Monte Carlo study. Our estimator performs comparably to the MLE in a finite sample but greatly reduces the computational cost. The paper documents that the quantity-quality trade-offs depend on the household composition and specialization in the household. Using the proposed estimator, we estimate a dynastic model that rationalizes these observed patterns.

What Accounts for the Racial Gap in Time Allocation and Intergenerational Transmission of Human Capital?

This paper analyzes the sources of the racial difference in the intergenerational transmission of human capital by developing and estimating a dynastic model of parental time and monetary inputs in early childhood with endogenous fertility, home hours, labor supply, marriage, and divorce. It finds that the racial differences in the marriage matching patterns lead to racial differences in labor supply and home hours of couples. Although both the black-white labor market earnings and marriage market gaps are important sources of the black-white achievement gap, the assortative mating and divorce probabilities racial gaps accounts for a larger fraction of it.

Εὐχαί ὑπὲρ τῶν παίδων: Augustus and some honors for Gaius and Lucius in the Roman east

Augustus felt an urgent need to justify the honours conferred on his adoptive sons, Gaius and Lucius Caesar, and the positions attributed to them, before the period of time provided by law, on the basis of merit (… he never recommended his sons for office without adding “If they be worthy of it”, Suet. Aug. 56). The aim of this paper is to examine some epigraphic documents showing how the principes iuventutis were celebrated by eastern communities adhering to the dynastic model identified through the political choices of the princeps at a time when Gaius and Lucius’ very young age suggested more caution in appointing them for public honors.

What Is The Source Of The Intergenerational Correlation In Earnings?

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.

Estimation of Dynastic Life-Cycle Discrete Choice Models

This paper explores the estimation of a class of life-cycle discrete choice intergenerational models. It proposes a new semiparametric estimator. It shows that it is root-N-consistent and asymptotically normally distributed. We compare our estimator with a modified version of the full solution maximum likelihood estimator (MLE) in a Monte Carlo study. Our estimator performs comparably to the MLE in a finite sample but greatly reduces the computational cost. The paper documents that the quantity-quality trade-offs depend on the household composition and specialization in the household. Using the proposed estimator, we estimate a dynastic model that rationalizes these observed patterns.