Abstract
We use a dynastic model of household behavior to estimate and decompose the correlations in earnings across generations. The estimated model can explain 75% to 80% of the observed correlation in lifetime earnings between fathers and sons, mothers and daughters, and families across generations. We find that human-capital accumulation in the labor market, the nonlinear return to part-versus full-time work, and the return to parental time investment in children are the main forces driving the intergenerational correlation in earnings. The primary mechanism through which these three sources affect the intergenerational correlation in earnings is their effects on fertility and the division of labor within the household. Assortative mating magnifies these forces.
| Original language | English |
|---|---|
| Pages (from-to) | 24-45 |
| Number of pages | 22 |
| Journal | Journal of Monetary Economics |
| Volume | 129 |
| DOIs | |
| State | Published - Jul 2022 |
Bibliographical note
Publisher Copyright:© 2022 Elsevier B.V.
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 8 Decent Work and Economic Growth
Keywords
- Estimation
- Human capital
- Intergenerational models
- Panel study of income dynamics
- discrete choice
ASJC Scopus subject areas
- Finance
- Economics and Econometrics
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