Factors Affecting the Transmission of Earnings across Generations: A Quantile Regression Approach

In this paper we estimate intergenerational earnings mobility models using quantile regressions. Quantile regression is a less restrictive estimation approach than more commonly used methods such as ordinary least squares and instrumental variables, which only estimate the mean effects of intergenerational earnings correlation. Further, we investigate the role of education as an intergenerational transmission mechanism for earnings. We find that the intergenerational earnings correlation is greater at the bottom of the son's conditional earnings distribution than at the top, and that controlling for son's education reduces the intergenerational earnings correlation. We also find that education is relatively more valuable at the bottom of the conditional earnings distribution and thus tends to compress the distribution.

[1]  Kevin M. Murphy,et al.  Wage Premiums for College Graduates , 1989 .

[2]  Moshe Buchinsky.  CHANGES IN THE U.S. WAGE STRUCTURE 1963-1987: APPLICATION OF QUANTILE REGRESSION , 1994 .

[3]  B. Efron.  The jackknife, the bootstrap, and other resampling plans , 1987 .

[4]  K. Couch,et al.  Divorce, Educational Attainment, and the Earnings Mobility of Sons , 1997 .

[5]  Paul Taubman,et al.  The Intergenerational Correlation Between Children'S Adult Earnings And Their Parents' Income: Results From The Michigan Panel Survey Of Income Dynamics , 1990 .

[6]  G. Psacharopoulos,et al.  Returns to education: a further international update and implications , 1985 .

[7]  B. Ravikumar,et al.  Public versus Private Investment in Human Capital: Endogenous Growth and Income Inequality , 1992, Journal of Political Economy.

[8]  K. Couch,et al.  Intergenerational Correlations in Labor Market Status: A Comparison of the United States and Germany , 1997 .

[9]  Joseph G. Altonji,et al.  Relationships Among the Family Incomes and Labor Market Outcomes of Relatives , 1991 .

[10]  Gary Solon,et al.  Intergenerational Income Mobility in the United States , 1992 .

[11]  Timothy G. Conley,et al.  Quantile Regression Analysis of Censored Wealth Data , 1994 .

[12]  G. Mwabu,et al.  Education Returns across Quantiles of the Wage Function: Alternative Explanations for Returns to Education by Race in South Africa , 1996 .

[13]  J. Powell,et al.  Least absolute deviations estimation for the censored regression model , 1984 .

[14]  David J. Zimmerman,et al.  Regression Toward Mediocrity in Economic Stature , 1992 .

[15]  R. Koenker,et al.  Robust Tests for Heteroscedasticity Based on Regression Quantiles , 1982 .