Intergenerational Earnings Research Articles

The two-sample two-stage least squares method to estimate the intergenerational earnings elasticity

The two-sample two-stage least squares method to estimate the intergenerational earnings elasticity

Intergenerational earnings mobility in Chile: the tale of the upper tail

Intergenerational earnings mobility in Chile: the tale of the upper tail

Intergenerational mobility of earnings in rural China

ABSTRACT Due to dataset limitations, the results from previous studies on intergenerational income mobility in rural China are inconsistent. Using panel data from the Chinese Health and Nutrition Survey, this study develops a modified version of the model by Zimmerman [Zimmerman DJ (1992) Regression towards mediocrity in economic stature. Am Econ Rev 82(3):409–429] and estimates the intergenerational earnings mobility in rural China. The new estimate demonstrates that intergenerational earnings elasticity is likely greater than 0.5, suggesting a relatively low rate of intergenerational mobility.

Intergenerational earnings mobility in Ghana

Intergenerational earnings mobility in Ghana

Intergenerational earnings persistence and the provision of public goods: evidence from chile’s constitutional process

Intergenerational earnings persistence and the provision of public goods: evidence from chile’s constitutional process

Breaking the Links: Natural Resource Booms and Intergenerational Mobility

Abstract The paper demonstrates that a large economic sock such as an oil boom increases intergenerational earnings mobility among directly affected men, mostly through increased bottom-up mobility, but not for women. Preexisting local differences in mobility or shifts in the earnings distributions do not drive these findings. Instead, changes in relative earnings paid to workers with different skills offer the best explanation. Moreover, we document that intergenerational mobility is significantly higher for the indirectly affected thirdgeneration and that the oil boom broke the earnings link between first- and third-generation men.

Intergenerational earnings mobility and demographic dynamics: Welfare analysis of an aging Japan

This paper simulates the effects of intergenerational earnings mobility on individual welfare and future demography in an aging and depopulating Japan. A simulation analysis finds that increased intergenerational mobility across income classes promotes economic growth, and from a long-term perspective, a higher mobility potentially achieves Pareto improvements. In the long run, however, it will hinder economic growth. This is because increased mobility increases the population share of individuals with a higher labor productivity, enhancing economic growth in the initial stage, but because of their lower fertility, an increase in their population ratio negatively effects the total population over time.

Intergenerational Earnings Persistence and the Provision of Public Goods: Evidence from Chile’s Constitutional Process

Intergenerational Earnings Persistence and the Provision of Public Goods: Evidence from Chile’s Constitutional Process

Intergenerational Earnings Mobility in Chile’s Formal Private Sector: The Tale of the Upper Tail

Intergenerational Earnings Mobility in Chile’s Formal Private Sector: The Tale of the Upper Tail

Status and path of intergenerational transmission of poverty in rural China: A human capital investment perspective

This paper focused on the intergenerational transmission of poverty in rural China by estimating the intergenerational transmission of earnings and stated its mechanism from the perspective of human capital investment before children participated in the labor market. The data used in this study were longitude data collected in 2 000 households of 100 villages among 25 counties across five provinces in 2005, 2008, 2012, 2016, and 2019. Qualitative and quantitative methods were adopted. We found a significant intergenerational transmission of earnings in rural China, especially for the pairs of father–children and parents–children. The intergenerational earnings’ elasticities were much less than those in urban areas, which indicated better social mobility in rural areas than that in urban China. The children with parents who could earn much were more likely to be invested before they participated in the labor market, gain a high education and have more skills. Three cases further showed that the mechanism of human capital investment in children breaking the intergenerational transmission of poverty and promoting social mobility.

Marital Sorting and Cross-Country Differences in Intergenerational Earnings Persistence

In a real economy, decisions on investments in child human capital of children are made by families rather than by atomistic parents as is typically assumed in the literature. This paper incorporates family formation into an otherwise standard dynastic framework with human capital accumulation. The study finds that accounting for differences in taxation and education policies between the U.S. and 10 OECD countries is sufficient to replicate cross-country variations in the degree of assortative matching and its positive correlation with the persistence of intergenerational earnings. Positive assortative matching is crucial to a model’s ability to generate realistic levels of intergenerational earnings correlation observed in the data.

The Impact of Inequality on Intergenerational Mobility

The extent and causes of trends and cross-national variation in social class and occupational status mobility have been major topics of sociological research for decades. This topic has acquired renewed salience as inequality in many industrialized countries has increased and as improvements in data and estimation methods have stimulated increased scrutiny of intergenerational earnings or income mobility as well. The more recent focus on earnings or income mobility largely comes from economists, though sociologists and interdisciplinary teams have made increasingly important contributions. Compelling evidence supports the hypothesis that inequality trends are generating trends in absolute earnings mobility. Evidence about the impact of inequality on relative mobility is less clear, partly because within-country relative mobility trends are weak, partly because between-country differences in relative mobility likely have multiple causes, and partly because the rough stability in relative mobility could arise from offsetting forces. Efforts to exploit local variation in inequality and mobility have added important insights, as have studies that focus attention on mechanisms. The question of how inequality affects mobility cannot be answered definitively without a solid understanding of the multiple pathways that link a country's economic and institutional structure to its pattern of social mobility.

How Do Education, Cognitive Skills, Cultural and Social Capital Account for Intergenerational Earnings Persistence? Evidence from the Netherlands

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.

Intergenerational Earnings Persistence in Italy between Actual Father–Son Pairs Accounting for Lifecycle and Attenuation Bias

AbstractUsing a longitudinal dataset built merging administrative and survey data, we contribute to the literature on intergenerational inequality providing the first estimate of the intergenerational earnings elasticity (IGE) in Italy based on actual father–son pairs, taking into account issues related to measurement biases and comparing the size of the lifecycle bias when sons are selected by age or by potential experience (i.e. the number of years since the end of their studies). Our findings confirm that Italy is a low‐mobility country. In our baseline estimate, when sons are observed 6 years after the end of their studies, the IGE is approximately 0.41 and is robust to various measures of fathers’ lifetime earnings. However, our results might be downward biased by the young age of sons. To measure the lifecycle bias and correct IGE estimates, we run the ‘forward regression’ of yearly earnings on lifetime earnings on a sample of workers followed for 30 years. We find that selecting sons by potential experience rather than by age reduces the lifecycle bias at young ages and the ‘corrected’ IGE is 0.48. The picture of Italy as a low‐mobility country is also confirmed when we measure the intergenerational association through the rank–rank slope.

How Much Does Marital Sorting Contribute to Intergenerational Socioeconomic Persistence?

This paper investigates to what extent assortative mating contributes to intergenerational earnings persistence. I use an errors-in-variables model to demonstrate how pooling of partners’ ‘potential’ earnings affects intergenerational earnings persistence, and simulate persistence under different assumptions about assortative mating and women’s earnings distribution. Using Swedish data on cohorts born 1945–1965, I show that a substantial decline in marital sorting has contributed little to lowering intergenerational persistence. Variations in marital sorting must be large to affect intergenerational mobility to a great extent. Instead, the relative earnings distributions of men and women, in combination with sorting, are important for intergenerational persistence.

Intergenerational Earnings and Income Mobility in Vietnam

AbstractThis paper empirically examines the intergenerational mobility of earnings and income in Vietnam using the two‐sample two‐stage least squares estimation. The baseline intergenerational elasticity estimates show that Vietnam occupies the intermediate degrees of intergenerational mobility of earnings and income for both sons and daughters. In particular, a rise of 10 per cent in fathers’ earnings is on average associated with an increase of 3.61 per cent and 3.94 per cent for sons’ earnings and income, respectively. The corresponding figures for daughters’ earnings and income are 2.84 per cent and 3.33 per cent, respectively.

Intergenerational Earnings Inequality: New Evidence From Italy

Using an innovative dataset built by merging survey and administrative data, we provide new estimates of intergenerational earnings’ inequality between fathers and sons in Italy, extending previous evidence in several directions. We rely on the TSTSLS method to predict fathers’ earnings and compute intergenerational elasticities and imputed rank–rank slopes, trying to reduce estimation biases. Confirming previous evidence, we find that Italy is characterized by a high intergenerational inequality in cross‐country comparison. Extending previous analyses, we show that the intergenerational association increases when sons at older ages and multi‐annual averages of pseudo‐fathers’ and sons’ earnings are considered. We also find that the intergenerational persistence differs across geographical macro‐areas and is high also for daughters, especially when family earnings are considered. Furthermore, estimates where possible mediating factors of the parental influence are included among the covariates show that a high intergenerational association persists when sons’ education and occupation are controlled for.

Intergenerational Earnings Mobility in Post‐Soviet Russia

We make use of longitudinal data for the Russian economy over 1994–2016 to obtain earnings information about parents and children. We show that rank correlations give reliable estimates, and find intergenerational correlations for sons and daughters that are comparable to those found in the USA and the UK. Sons earn more than daughters conditional on education and parents’ rank. Observable household characteristics and unobservables contribute about the same to the correlations, both more than education.

Intergenerational earnings mobility in Taiwan: 1990–2010

In this paper, we study the intergenerational earnings mobility between fathers and sons in Taiwan. We apply the two-sample approach developed by Bjorklund and Jantti (Am Econ Rev 87(5):1009–1018, 1997) and find that the intergenerational earnings elasticity in Taiwan was around 0.4–0.5 in both the early 1990s and the late 2000s. We also estimate the intergenerational rank association in earnings to have been around 0.3 in both periods. Intergenerational earnings mobility in Taiwan is similar to that in less mobile countries such as the USA, and it appears to remain stable during a period of rapid economic development.

Intergenerational Earnings Mobility and Returns to Education in Hong Kong: A Developed Society with High Economic Inequality

The Great Gatsby curve shows societies with higher levels of economic inequality to exhibit lower levels of intergenerational mobility, with such mobility influenced by educational opportunities. Hong Kong features one of the world’s largest degrees of economic inequality, but has also witnessed a substantial expansion in tertiary education in the past two decades. This paper investigates the change in intergenerational earnings mobility and returns to education in Hong Kong over time. Data were drawn from the 1996, 2006 and 2016 Hong Kong Population By-Censuses. Instrumental variables regression was performed to estimate the change in the average level of such mobility, and instrumental variables quantile regression to estimate the change in the non-linear pattern of intergenerational mobility and returns to education. The findings show the average level of intergenerational mobility has been improved, with intergenerational elasticity decreasing from 0.37 in 1996 to 0.26 in 2006 and 0.23 in 2016. However, intergenerational economic transmission among high-earners remains persistently strong. Examination of the non-linear pattern shows that it is the reproduction of wealth rather than the reproduction of poverty that has led to intergenerational persistence in Hong Kong. A similar pattern was observed in 1996, 2006 and 2016. Returns to non-degree tertiary education were similar across the earnings distribution in 1996 and 2016 but more valuable for low-earners in 2006. Degree-level tertiary education is persistently more valuable for high- than low-earners, which exacerbated earnings inequality in 1996, 2006 and 2016.