Intergenerational Earnings Mobility Revisited: Estimates Based on Lifetime Earnings

23 Pages Posted: 28 Feb 2012

See all articles by Øivind Anti Nilsen

Øivind Anti Nilsen

affiliation not provided to SSRN

Kjell Vaage

University of Bergen - Department of Economics

Arild Aakvik

University of Bergen - Department of Economics

Karl Jacobsen

Statistics Norway

Date Written: March 2012

Abstract

Using Norwegian intergenerational data, which include a substantial part of the life‐cycle earnings for children and almost the entire life‐cycle earnings for their fathers, we present new estimates of intergenerational mobility. Extending the length of fathers’ earnings window from 5 to 25 years increases estimated elasticities. Increasing the age at which fathers’ earnings are observed has the opposite effect. Biases in the estimated elasticities are related to both transitory earnings variation and life‐cycle measurement error; the former appear to be more important than the latter. Estimation bias stemming from persistence in transitory innovations plays only a minor role. Our findings indicate that intergenerational earnings mobility in Norway might have been strongly overstated in many earlier studies with shorter earnings histories. Some of our new estimates are twice as large as earlier estimates.

Keywords: Intergenerational mobility, measurement error

JEL Classification: J62, C23

Suggested Citation

Nilsen, Øivind Anti and Vaage, Kjell and Aakvik, Arild and Jacobsen, Karl, Intergenerational Earnings Mobility Revisited: Estimates Based on Lifetime Earnings (March 2012). The Scandinavian Journal of Economics, Vol. 114, Issue 1, pp. 1-23, 2012, Available at SSRN: https://ssrn.com/abstract=2012219 or http://dx.doi.org/10.1111/j.1467-9442.2011.01672.x

Øivind Anti Nilsen (Contact Author)

affiliation not provided to SSRN

No Address Available

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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