This paper studies intergenerational mobility—the transmission of family influence. We develop and estimate measures of lifetime resources motivated by economic theory that account for differences in life-cycle trajectories, and uncertainty about future income. We identify the effects of parents’ resources on child outcomes through policy shocks at different childhood ages that affect family investments. Parents’ expected lifetime resources are stronger predictors of child outcomes than the income measures traditionally used in the literature on social mobility. Moreover, while effects estimated through exogenous variation in parents’ expected lifetime resources are smaller in magnitude than their correlational counterparts, they are still sizable and largest in early childhood. The paper illustrates how integrating key insights from different literatures when studying intergenerational mobility allows for a better understanding of the importance of factors such as the family’s role, changes in individual life cycles across generations, and the expectations and trajectories individuals face across their lifetimes.
Authors
Sadegh S.M. Eshaghnia, James J. Heckman, Rasmus Landersø, Rafeh Qureshi
- Acknowledgements & Disclosure
- This research was supported in part by an anonymous funder, the ROCKWOOL Foundation, and NIH grant NICHD R37HD065072. The views expressed in this paper are solely those of the authors and do not necessarily represent those of the funders or the official views of the National Institutes of Health. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w33023
- Pages
- 50
- Published in
- United States of America
Table of Contents
- Introduction 3
- Our Measures of Lifetime Resources 6
- Measures of Expected Lifetime Resources 7
- Instruments for Expected Lifetime Resources 8
- Our Data 11
- Identification and Estimation 13
- Identifying and Estimating Information Sets 14
- Identification and Estimation When Using Instruments 15
- Lifetime Income Measures and Lifecycle Outcomes 17
- Comparing Alternative Measures of Resources 19
- Nonstationarity across Cohorts 21
- Parental Resources and Child Outcomes 25
- Estimates of Intergenerational Mobility 28
- Intergenerational Elasticities for Lifetime Measures by OLS 28
- IV Estimation Results 31
- Correlations and Cross-Sectional Inequality 33
- Extensions 34
- Effects of Parents' Resources on Education 34
- Differences Across Parents' Level of Resources 35
- Differences in Mobility by Child's Gender 39
- Absolute Mobility 41
- Conclusion 43
