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Journal ArticleDOI

A group-specific measure of intergenerational persistence

Tom Hertz1
01 Sep 2008-Economics Letters (North-Holland)-Vol. 100, Iss: 3, pp 415-417
TL;DR: In this article, a method for comparing intergenerational mobility for different groups, taking account of both within-and between-group effects, is described, which yields results that are more informative than is the comparison of within-group estimates alone.
About: This article is published in Economics Letters.The article was published on 2008-09-01 and is currently open access. It has received 37 citations till now.

Summary (1 min read)

Introduction

  • Hertz (2005) discusses this problem and notes that stratifying and calculating within-group elasticities does not produce a meaningful answer.
  • Children of the disadvantaged group may be quite mobile with respect to their parents when measured by their within-group intergenerational elasticity.
  • In the remainder of the paper I outline the technique, and provide examples of its application using the dataset found in Hertz (2005) .

2. The Decomposition

  • This product will be near zero if the group mean approximates the sample mean in either generation.
  • On the other hand, if a group's mean lies above (or below) the sample mean in both generations, this contribution will be positive; and if there are just two groups this term would be positive both for the lower-income and the higher-income group.
  • 2 Last, for a group whose mean differs from that of the other group(s) in both generations, the smaller the group, the larger will be its distance from the pooled sample mean, and the larger will be the contribution of this term of the equation.

3. Examples

  • 3 In the two-group (b,w) case, the between-group estimator simplifies to In the row labeled "B", the between-group effect is split into its Black and White components, with the effect for Blacks being much the larger (1.046 versus 0.051).
  • This occurs because their share of the sample is small, so their group mean lies farther from the sample mean than does the mean for Whites.
  • Next, these between-group components are weighted by their group shares, and their sum is indeed 0.231.
  • This confirms that equations [1] and [2] are indeed equivalent.

[ TABLE 1 ABOUT HERE]

  • This stands at 1.367 for Blacks and 0.349 for Whites, implying that once within-and between-group effects are both accounted for, generational income persistence for Blacks is roughly four times as high as for Whites.
  • Another way to express this fact is to look at the group-share estimates in the final row (which sum to the pooled intergenerational elasticity), and to note that while Blacks make up just 18 per cent of the sample, they generate nearly half (0.248 / 0.534) of the parent-child covariance that underlies the intergenerational elasticity.
  • This is not due to a larger within-group effect, but to the significant gap in mean incomes across groups.
  • -7 - The regional decomposition involves four groups of more nearly equal size, and smaller differences in means.
  • As expected, when this between-group component is allocated across regions (row B), it has a noticeable effect on estimated persistence for the Northeast and South (0.073 and 0.140), but little effect for the other regions, which lie closer to the mean.

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Citations
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Journal ArticleDOI
TL;DR: For instance, the authors found that the global average correlation between parent and child's schooling has held steady at about 0.4 for the past fifty years, with Latin America displaying the highest intergenerational correlations, and the Nordic countries the lowest.
Abstract: This paper estimates 50-year trends in the intergenerational persistence of educational attainment for a sample of 42 nations around the globe. Large regional differences in educational persistence are documented, with Latin America displaying the highest intergenerational correlations, and the Nordic countries the lowest. We also demonstrate that the global average correlation between parent and child's schooling has held steady at about 0.4 for the past fifty years.

552 citations

Journal ArticleDOI
TL;DR: In this paper, the authors estimate the intergenerational income elasticity for urban China, paying careful attention to the potential biases induced by income fluctuations and life cycle effects, and find that the relative position of children in the distribution is largely related to their parents' incomes.
Abstract: This paper estimates the intergenerational income elasticity for urban China, paying careful attention to the potential biases induced by income fluctuations and life cycle effects. Our preferred estimate indicates that the intergenerational income elasticity for father–son is 0.63. This suggests that while China has experienced rapid growth of absolute incomes, the relative position of children in the distribution is largely related to their parents' incomes. By investigating possible causal channels, we find that parental education plays one of the most important roles in transmitting economic status from parents to children.

140 citations

Journal ArticleDOI
TL;DR: In this paper, a unique son-father matched data that is representative of the entire adult male population (aged 20-65) in India was used to document the evolution of intergenerational transmission of educational attainment in India over time, among different castes, and states for the birth cohorts of 1940-85.
Abstract: Using nationally representative and publicly available India Human Development Survey (IHDS), we create a unique son-father matched data that is representative of the entire adult male population (aged 20-65) in India. We use this data to document the evolution of intergenerational transmission of educational attainment in India over time, among different castes, and states for the birth cohorts of 1940-85. We find that educational persistence, as measured by the regression coefficient of fathers’ education as a predictor of schooling in the next generation, has declined over time. This implies increases in average educational attainment are driven primarily by increases among children of less educated fathers. However, we do not find such declining trend in the correlation between sons and fathers education, another commonly used measure of persistence. To understand the source of such a discrepancy between the two measures of educational persistence we decompose the intergenerational correlation and find that although persistence has declined at the lower end of fathers’ educational distribution, it has increased at the top end of the fathers’ educational distribution.

124 citations

Journal ArticleDOI
TL;DR: It is found that educational persistence, as measured by the regression coefficient of father's education as a predictor of son’s education, has declined over time, which implies that increases in average educational attainment are driven primarily by increases among children of less-educated fathers.
Abstract: Using the nationally representative India Human Development Survey (IHDS), we create a unique son-father matched data set that is representative of the entire adult male population (aged 20-65) in India. We use these data to document the evolution of intergenerational transmission of educational attainment in India over time, among different castes and states for the birth cohorts of 1940-1985. We find that educational persistence, as measured by the regression coefficient of father's education as a predictor of son's education, has declined over time. This implies that increases in average educational attainment are driven primarily by increases among children of less-educated fathers. However, we do not find such a declining trend in the correlation between educational attainment of sons and fathers, which is another commonly used measure of persistence. To understand the source of such a discrepancy between the two measures of educational persistence, we decompose the intergenerational correlation and find that although persistence has declined at the lower end of the fathers' educational distribution, it has increased at the top end of that distribution.

112 citations

Journal ArticleDOI
TL;DR: In this paper, the effect of covariates on intergenerational income mobility was investigated using nonparametric regression and average derivatives, where the dependent variables involve nonsmooth functions of estimated components - marginal quantiles for transition probabilities and relative ranks for upward mobility.
Abstract: This paper concerns the problem of inferring the effects of covariates on intergenerational income mobility, i.e. on the relationship between the incomes of parents and future earnings of their children. We focus on two different measures of mobility - (i) traditional transition probability of movement across income quantiles over generations and (ii) a new direct measure of upward mobility, viz. the probability that an adult child's relative position exceeds that of the parents. We estimate the effect of possibly continuously distributed covariates from data using nonparametric regression and average derivatives and derive the distribution theory for these measures. The analytical novelty in the derivation is that the dependent variables involve nonsmooth functions of estimated components - marginal quantiles for transition probabilities and relative ranks for upward mobility - thus necessitating nontrivial modifications of standard nonparametric regression theory. We use these methods on US data from the National Longitudinal Survey of Youth to study black-white differences in intergenerational mobility, a topic which has received scant attention in the literature. We document that whites experience greater intergenerational mobility than blacks. Estimates of conditional mobility using nonparametric regression reveal that most of the interracial mobility gap can be accounted for by differences in cognitive skills during adolescence. The methods developed here have wider applicability to estimation of nonparametric regression and average derivatives where the dependent variable either involves a preliminary finite-dimensional estimate in a nonsmooth way or is a nonsmooth functional of ranks of one or more random variables.

101 citations


Cites background from "A group-specific measure of interge..."

  • ...Hertz (2008) developed an alternative estimator for comparing IGM for different groups that takes into account both the within—and the between—group effects, and found that blacks have four time greater earnings persistence using this measure....

    [...]

  • ..., Van de Gaer, Schokkaert, and Martinez (2001), Roemer (2004), Swift (2005), Jencks and Tach (2006)). Roemer (2004), in particular, emphasized that a society with high equality of opportunity is one that lets children from varying backgrounds exerting the same effort to reach similar economic status....

    [...]

  • ..., Van de Gaer, Schokkaert, and Martinez (2001), Roemer (2004), Swift (2005), Jencks and Tach (2006))....

    [...]

References
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Book
03 Jan 2008
TL;DR: This article found that intergenerational inequality in the United States is far greater than was previously thought, and while the inheritance of wealth and the better schooling typically enjoyed by the children of the well-to-do contribute to this process, these two standard explanations fail to explain the extent of inter-generational status transmission, instead, parent-offspring similarities in personality and behavior may play an important role.
Abstract: Is the United States "the land of equal opportunity" or is the playing field tilted in favor of those whose parents are wealthy, well educated, and white? If family background is important in getting ahead, why? And if the processes that transmit economic status from parent to child are unfair, could public policy address the problem? Unequal Chances provides new answers to these questions by leading economists, sociologists, biologists, behavioral geneticists, and philosophers. New estimates show that intergenerational inequality in the United States is far greater than was previously thought. Moreover, while the inheritance of wealth and the better schooling typically enjoyed by the children of the well-to-do contribute to this process, these two standard explanations fail to explain the extent of intergenerational status transmission. The genetic inheritance of IQ is even less important. Instead, parent-offspring similarities in personality and behavior may play an important role. Race contributes to the process, and the intergenerational mobility patterns of African Americans and European Americans differ substantially.

434 citations

Posted Content
TL;DR: This article found that both pre- and post-birth factors contribute to intergenerational transmissions, and that pre-birthing factors are more important for mother's education and less important for father's income.
Abstract: We use unique Swedish data to estimate intergenerational associations between adoptees and their biological and adoptive parents. We argue that the impact from biological parents captures broad pre-birth factors, including genes and prenatal environment, and the impact from adoptive parents represents broad post-birth factors, such as childhood environment, for the intergenerational association in education and income. We find that both pre- and post-birth factors contribute to intergenerational transmissions, and that pre-birth factors are more important for mother's education and less important for father's income. We also find some evidence for a positive interaction effect between post-birth environment and pre-birth factors.

394 citations

Journal ArticleDOI
TL;DR: In this article, the authors used Swedish data with information on adopted children's biological and adoptive parents to estimate intergenerational mobility associations in earnings and education, and they found that both pre- and post-birth factors contribute to inter-generational earnings.
Abstract: We use unique Swedish data with information on adopted children's biological and adoptive parents to estimate intergenerational mobility associations in earnings and education. We argue that the impact from biological parents captures broad prebirth factors, including genes and prenatal environment, and the impact from adoptive parents represents broad postbirth factors, such as childhood environment. We find that both pre- and postbirth factors contribute to intergenerational earnings and education transmissions, and that prebirth factors are more important for mother's education and less important for father's income. We also find some evidence for a positive interaction effect between postbirth environment and prebirth factors.

321 citations

Journal ArticleDOI
TL;DR: This article analyzed a new set of data on Korean American adoptees who were quasi-randomly assigned to adoptive families and found that shared family environment explains 14 percent of the variation in educational attainment, 35 percent ofthe variation in college selectivity, and 33 percent of drinking behavior.
Abstract: I analyze a new set of data on Korean American adoptees who were quasi-randomly assigned to adoptive families. I find large effects on adoptees' education, income, and health from assignment to parents with more education and from assignment to smaller families. Parental education and family size are significantly more correlated with adoptee outcomes than are parental income or neighborhood characteristics. Outcomes such as drinking, smoking, and the selectivity of college attended are more determined by nurture than is educational attainment. Using the standard behavioral genetics variance decomposition, I find that shared family environment explains 14 percent of the variation in educational attainment, 35 percent ofthe variation in college selectivity, and 33 percent of the variation in drinking behavior.

294 citations

BookDOI
TL;DR: Corak et al. as mentioned in this paper used a model of intergenerational mobility variation over time and place to study the effect of generational mobility on economic mobility in the United States and Sweden.
Abstract: 1. Introduction M. Corak 2. A model of intergenerational mobility variation over time and place G. Solon 3. Equal opportunity and intergenerational mobility: going beyond intergenerational income transition matrices John E. Roemer 4. Intergenerational mobility for whom? The experience of high and low earning sons in international perspective N. Grawe 5. Trends in the intergenerational economic mobility of sons and daughters in the United States S. Mayer and L. Lopoo 6. Changes in intergenerational mobility in Britain J. Blanden, A. Goodman, P. Gregg and S. Machin 7. Intergenerational mobility in Britain: new evidence from the British household panel survey J. Ermisch and M. Francesconi 8. Nonlinear patterns of intergenerational mobility in Germany and the United States K. Couch and D. Lillard 9. Family structure and labour market success A. Bjorklund, E. Osterbacka, M. Jantti, O. Raaum and T. Eriksson 10. New evidence on the intergenerational correlations in welfare participation M. Page 11. Intergenerational influences on the receipt of unemployment insurance in Canada and Sweden M. Corak, B. Gustafsson and T. Osterberg 12. Unequal opportunities and the mechanisms of social inheritance G. Esping-Andersen Conclusion.

227 citations

Frequently Asked Questions (1)
Q1. What are the contributions in this paper?

This paper outlines a decomposition technique that allows for inter-group comparisons of intergenerational persistence in economic status, for groups whose means are different. The usual disclaimers apply.