Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons

21 Pages Posted: 2 May 2007

See all articles by Bernt Bratsberg

Bernt Bratsberg

Kansas State University - Department of Economics; University of Oslo - Ragnar Frisch Centre for Economic Research

Knut Roed

Ragnar Frisch Centre for Economic Research; IZA Institute of Labor Economics

Oddbjorn Raaum

University of Oslo - Ragnar Frisch Centre for Economic Research

Robin Naylor

University of Warwick - Department of Economics

Markus Jantti

Stockholm University

Tor Eriksson

Aarhus University - Department of Economics

Abstract

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.

Suggested Citation

Bratsberg, Bernt and Røed, Knut and Raaum, Oddbjørn and Naylor, Robin A. and Jantti, Markus and Eriksson, Tor, Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons. Economic Journal, Vol. 117, No. 519, pp. C72-C92, March 2007, Available at SSRN: https://ssrn.com/abstract=981045 or http://dx.doi.org/10.1111/j.1468-0297.2007.02036.x

Bernt Bratsberg (Contact Author)

Kansas State University - Department of Economics ( email )

Manhattan, KS 66502-4001
United States

University of Oslo - Ragnar Frisch Centre for Economic Research

Gaustadalleen 21
N-0349 Oslo
Norway

Knut Røed

Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0349 Oslo
Norway

IZA Institute of Labor Economics

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

Oddbjørn Raaum

University of Oslo - Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0317 Oslo
Norway

Robin A. Naylor

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Markus Jantti

Stockholm University ( email )

Swedish Institute for Social Research
Stockholm, SE-10691
Sweden
+468162645 (Phone)

HOME PAGE: http://www.abo.fi/~mjantti/

Tor Eriksson

Aarhus University - Department of Economics ( email )

Fuglesangs Allé 4
Aarhus, 8210
Denmark
45 87164978 (Phone)

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