Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons
Kansas State University - Department of Economics; University of Oslo - Ragnar Frisch Centre for Economic Research
Ragnar Frisch Centre for Economic Research; Institute for the Study of Labor (IZA)
University of Oslo - Ragnar Frisch Centre for Economic Research
University of Warwick - Department of Economics
Abo Akademi University
Centre for Labour Market and Social Research (CLS); University of Aarhus - Department of Economics
Economic Journal, Vol. 117, No. 519, pp. C72-C92, March 2007
We show that the patterns of intergenerational earnings mobility in Denmark, Finland and Norway, unlike those for the US and the UK, are highly nonlinear. The Nordic relationship between log earnings of sons and fathers is flat in the lower segments of the fathers' earnings distribution - sons growing up in the poorest households have the same adult earnings prospects as sons in moderately poor households - and is increasingly positive in middle and upper segments. This convex pattern contrasts sharply with our findings for the US and the UK, where the relationship is much closer to being linear. As a result, cross-country comparisons of intergenerational earnings elasticities may be misleading with respect to transmission mechanisms in the central parts of the earnings distribution and uninformative in the tails of the distribution.
Number of Pages in PDF File: 21Accepted Paper Series
Date posted: May 2, 2007
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.766 seconds