Estimates of Intergenerational Elasticities Based on Lifetime Earnings

28 Pages Posted: 6 Oct 2008

See all articles by Øivind Anti Nilsen

Øivind Anti Nilsen

Norwegian School of Economics (NHH) - Department of Economics; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Kjell Vaage

University of Bergen - Department of Economics

Arild Aakvik

University of Bergen - Department of Economics

Karl Jacobsen

Statistics Norway

Abstract

Using Norwegian intergenerational data with a substantial part of the life-cycle earnings of children and almost the entire life-cycle earnings for their fathers, we present new estimates of intergenerational mobility. Extending the length of the fathers' earnings windows from 5 to 30 years increases the estimated elasticities. Increasing the age of father at observation has the opposite effect. Our findings indicate that intergenerational earnings mobility may have been strongly overstated in many earlier studies with shorter earnings histories. Biases in the estimated elasticities appear to be related to age and/or life-cycle measurement errors more than persistency in the transitory innovations.

Keywords: intergenerational mobility, measurement error

JEL Classification: J62, C23

Suggested Citation

Nilsen, Oivind Anti and Vaage, Kjell and Aakvik, Arild and Jacobsen, Karl, Estimates of Intergenerational Elasticities Based on Lifetime Earnings. IZA Discussion Paper No. 3709, Available at SSRN: https://ssrn.com/abstract=1278909 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Oivind Anti Nilsen (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5045 Bergen
Norway

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Kjell Vaage

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway
+47 5 558 9206 (Phone)
+47 5 558 9210 (Fax)

Arild Aakvik

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

Karl Jacobsen

Statistics Norway ( email )

N-0033 Oslo
Norway

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