Estimating the intergenerational persistence of lifetime earnings with life course matching: Evidence from the PSID

Why do estimates of the intergenerational persistence in earnings vary so much for the United States? Recent research suggests that lifecycle bias may be a major factor [Grawe, N., Lifecycle bias in estimates of intergenerational earnings persistence. Labour Economics 2006, 13:551–570; Haider, S., and Solon, G., Life-cycle variation in the association between current and lifetime earnings. American Economic Review 2006, 96(4):1308–1320.]. In this paper we estimate the intergenerational correlation in lifetime earnings by using sons' and fathers' earnings at similar ages in order to account for lifecycle bias. Our estimate based on earnings measured at 35–44 for both fathers and sons is similar to that for the age range 45–54.     

CROSS‐COUNTRY RANKINGS IN INTERGENERATIONAL MOBILITY: A COMPARISON OF APPROACHES FROM ECONOMICS AND SOCIOLOGY

Abstract This paper summarizes research on the relative level of intergenerational mobility – whether classified by income, education or social class. The literatures on education and income mobility reveal a similar ranking with South America, other developing nations, southern European countries and France tending to have rather limited mobility although the Nordic countries exhibit strong mobility. Estimates of mobility based on social class point to rather different patterns, and we demonstrate that these differences are most likely generated by intergenerational earnings persistence within social classes. The second part of the paper looks for explanations for the differences in earnings and education persistence and finds that mobility is negatively correlated with inequality and the return to education but positively correlated with a nation's education spending.     

Distributional Effects of a Continuous Treatment with an Application on Intergenerational Mobility

This paper considers the effect of a continuous treatment on the entire distribution of outcomes after adjusting for differences in the distribution of covariates across different levels of the treatment. Our methodology encompasses dose-response functions, counterfactual distributions, and ‘distributional policy effects’ depending on the assumptions invoked by the researcher. We propose a three-step estimator that consists of (i) estimating the distribution of the outcome conditional on the treatment and other covariates using quantile regression; (ii) for each value of the treatment, averaging over a counterfactual distribution of the covariates holding the treatment fixed; (iii) converting the resulting counterfactual distribution into parameters of interest that are easy to interpret. We show that our estimators converge uniformly to Gaussian processes and that the empirical bootstrap can be used to conduct uniformly valid inference across a range of values of the treatment. We use our method to study intergenerational income mobility where we consider effects of parents’ income on features of their child's income distribution such as (i) the fraction of children with income below the poverty line; (ii) the variance of child's income; and (iii) the inter-quantile range of child's income–all as a function of parents’ income.     

A change in the earnings penalty for British men with working wives: Evidence from the 1980's and 1990's

Using pooled cross-sectional data from 1984–1989 and 1990–1995, two-stage (Tobit/OLS) regressions show that the penalty on male earnings for working wives, found in earlier research for British males in the early 1980's in managerial and other occupations, is not present in the second half of the 1980's and is largely reversed by the 1990's; in most occupational clusters, managers most notably, it is replaced by an earnings premium. The results are consistent with a view that increases in married women's labor force participation in Britain, coupled with positive assortative mating, have overwhelmed any forces tending to reduce male salaries when their wives work.     

How important is family background for labor-economic outcomes?

This paper uses Swedish register data to examine four classical outcomes in empirical labor economics: IQ, noncognitive skills, years of schooling and long-run earnings. We estimate sibling correlations – and the variance components that define the sibling correlation – in these outcomes. We also estimate correlations for MZ-twins, who share all genes. We also extend the variance-component decomposition by accounting for birth order. We find that conventional intergenerational approaches severely underestimate the role of family background, and that future research should follow a more multidimensional approach to the study of family background.     

An alternative measure of intergenerational income mobility based on a random coefficient model

We propose an alternative measure of the degree to which income status is transmitted from one generation to another. Our indicator of intergenerational income mobility is based on a random coefficient model, which allows for variation in intergenerational mobility across families due to multiplicative unobserved family‐specific characteristics. This alternative measure suggests that intergenerational income persistence is typically stronger than when intergenerational income mobility is measured using the standard elasticity of sons' income with respect to fathers' income. Copyright © 2011 John Wiley & Sons, Ltd.     

Intergenerational mobility: New evidence from consumption data

The intergenerational persistence of consumption describes the extent to which children inherit the living standards of their parents. Evidence on this parameter is scarce due to limited data on the joint consumption of parents and children. This paper identifies parents who participated in the Danish Expenditure Survey, links them to their children through population‐wide Danish registries, and estimates the intergenerational elasticity of consumption in Denmark. The results suggest that, consistent with intergenerational consumption smoothing, the persistence of consumption across generations is higher than the persistence of earnings and income.     

Sons,daughters, wives,and the labour market outcomes of West German men

We find a strong association between family status and labor market outcomes for recent cohorts of West German men in the German Socio-Economic Panel. Living with a partner and living with a child both have substantial positive effects on earnings and work hours. These effects persist in individual fixed effects models that control for correlation in time-invariant unobservables that affect both family and work outcomes, though the inclusion of length of marriage reduces the effects of children. Child gender also matters — a first son increases fathers' work hours by 100 hours per year more than a first daughter, and positive effects of sons on work hours and earnings are particularly strong for men with higher levels of education. There is evidence of son “preference” in the probability that a German man is observed to be coresiding with a son — men are more likely to remain in the same household with a male child than a female child.     

Gender,family and career in the era of boundarylessness: determinants and effects of intra- and inter-organizational mobility

Changes in patterns of long-term employment make understanding the determinants of different career forms increasingly important to careers research. At the same time, the rise of dual-earner families demands greater attention to the ways in which gender and family characteristics shape careers than has been paid by traditional research. This paper addresses these issues, examining the determinants and consequences of intra-organizational and inter-organizational mobility, using a sample of employees from dual-earner couples. We find significant gender differences in these different types of career mobility, and in the effect of family relations on different forms of mobility. Women experience more inter-organizational mobility, while men experience more intraorganizational mobility. Having more children positively influences men's intra-organizational mobility, but increases inter-organizational mobility for women. Marital instability increases intra-organizational mobility among women, but has no effect among men. Each form of mobility has distinctive effects on objective and subjective indicators of career success for both men and women. Moving between organizations tends to depress earnings, but has no effect on how successful people feel in their careers. Job changes within an organization increase earnings, but have a negative effect on perceived success.     

外部经理人市场与公司内部治理对盈余管理的影响作用：替代或互补？

利用2015年我国900家上市公司数据，基于分位数回归和分位数分解分析了外部经理人市场和内部治理结构对企业应计和真实盈余管理的替代或互补作用。研究发现：（1）东部企业的盈余管理的策略选择不仅依赖于外部治理环境，还会受到自身盈余管理目标的影响；（2）在声誉机制下，外部经理人市场催生了东部企业经理人通过降低盈余管理获取短期利润的动机；（3）外部经理人市场和公司内部治理对应计和真实盈余管理的影响具有互补效应。     

The correlation of spouses' permanent and transitory earnings and family earnings inequality in Canada

I develop a very flexible error-component model of family earnings dynamics to examine recent Canadian trends in the variance of family earnings and its components using the ‘permanent-transitory’ analytical framework. In contrast to most studies of family earnings inequality, the main focus of this paper is on the trends in the correlation between spouses' permanent and transitory earnings. I find strong evidence of an increase in the correlation of spouses' permanent earnings before 1993 and no evidence of such an increase after 1993. However, the correlation of spouses' transitory earnings steadily increased throughout the 1990s and well into the 2000s.     

Earnings dynamics in Canada: an econometric analysis

This paper reports the results of an empirical analysis of earnings dynamics in the Canadian labour market based on earnings data based drawn from tax returns between 1982 and 1994. Individuals' movements up and down quintiles of the earnings distribution are analysed using a hazard model approach. This represents one of the first studies for any country which models mobility across the entire distribution of earnings, including the middle and upper ranges as well as the lower ranges. The effects on transitions between quintiles are analyzed for the following variables: elapsed time spent in a given quintile (i.e., duration dependence effects), age, sex, geographical region, area size of residence, family status, language and overall macroeconomic conditions. One principal finding is that the conditional probability of transiting up or down the earnings distribution depends negatively on the elapsed time that an individual has spent in a given quintile. The earnings mobility patterns appear to be cyclical and exhibit some tendency of reversion to the mean, whereby the conditional probability of upward (downward) mobility is higher for those individuals presently situated in the lower (higher) quintiles.     

Reapplication and extension: intergenerational mobility in the United States

This paper replicates and extends Solon's [Am. Econ. Rev. 82 (1992) 393–408.] article “Intergenerational Income Mobility in the United States ”. The results confirm previous findings about the degree of transmission in earnings and consumption from fathers to sons. The correlation between fathers' and sons' earnings lies in the neighborhood of 0.4 and the correlation in consumption is larger. Using the sons' outcomes when they are 5 years older does not alter the estimates of the correlation in earnings, but the estimates of the correlation in consumption are smaller and closer to the estimates of the correlation in earnings. The estimates that use consumption data are sensitive to whether sons' 1984 or 1989 outcomes are used and to whether one adjusts for family size and structure.     

New Insights into Unemployment Duration and Post Unemployment Earnings in Germany*

Building on non‐stationary search theory ( Mortensen, 1977 ; Van den Berg, 1990 ), this article estimates the effects of UB on unemployment durations and future earnings using unique administrative data in Germany. We apply censored Box–Cox quantile regression. Our results imply that the length of entitlement shows only a weak effect on unemployment duration for entitlement lengths up to 12 months and no effect on post unemployment earnings. There are noticeable effects on exits from unemployment for entitlement lengths above 12 months. A high wage replacement rate for low‐wage earners is associated with a longer duration of unemployment and higher post unemployment earnings.     

CEO Stock‐Based Incentive Compensation and Firm Performance: A Quantile Regression Approach

This study employs the quantile regression model to examine the non‐monotonic impact of CEO stock‐based compensation on firm performance, using the data for U.S. non‐financial firms from 1993 to 2005. The results indicate that while the impact of CEO stock‐based pay on firm performance is positive for firms in the higher earnings quantile levels, the impact is negative for firms in the lower levels. In addition, the “V‐shaped” relationship between CEO stock‐based pay and firm performance satisfactorily explains the longstanding disagreement among earlier studies with regard to whether CEO stock‐based pay can enhance firm performance. Furthermore, the quantile‐varying pattern of the impact of stock‐based compensation on firm performance is robust after controlling for the industrial and yearly effects. It is also robust to the use of the pay‐for‐performance sensitivity as an alternative explanatory variable or the market‐based measure of performance as the dependent variable, or the consideration of the suspected endogenous problem between firm performance and stock‐based compensation.     

Upstream intergenerational transfers in economic development: The role of family ties and their cultural transmission

I construct a model where upstream income transfers, from adult children to their old parents, are driven by a culture of strong family ties. This evolves endogenously, through a process of intergenerational cultural transmission. The two-way causal link between economic and cultural change can be a strong enough force to offset cultural substitution, thus generating path-dependent outcomes. These outcomes show that economic development is negatively related with upstream intergenerational transfers, and with the strength of family ties. On the one hand, the economy may follow a convergence path towards a low level of economic development, where adherence to strong family ties is the dominant characteristic of a culturally homogeneous population, and where the overall flow of intergenerational transfers is substantial. On the other hand, the economy may follow a different path of convergence towards a relatively higher level of economic development, where the population is more diverse in terms of their attitudes on family ties, and where the overall flow of intergenerational transfers is lower by comparison.     

Moving Towards Estimating Sons' Lifetime Intergenerational Economic Mobility in the UK

Estimates of intergenerational economic mobility that use point in time measures of income and earnings suffer from lifecycle and attenuation bias. They also suffer from sample selection issues and further bias driven by spells out of work. We consider these issues together for UK data, the National Child Development Study and British Cohort Study, for the first time. When all three biases are considered, our best estimate of lifetime intergenerational economic persistence in the UK is 0.43 for children born in 1970. Whilst we argue that this is the best available estimate to date, we discuss why there is good reason to believe that this is still a lower bound, owing to residual attenuation bias.     

Quasi-maximum likelihood estimation for conditional quantiles

In this paper, we construct a new class of estimators for conditional quantiles in possibly misspecified nonlinear models with time series data. Proposed estimators belong to the family of quasi-maximum likelihood estimators (QMLEs) and are based on a new family of densities which we call ‘tick-exponential’. A well-known member of the tick-exponential family is the asymmetric Laplace density, and the corresponding QMLE reduces to the Koenker and Bassett's (Econometrica 46 (1978) 33) nonlinear quantile regression estimator. We derive primitive conditions under which the tick-exponential QMLEs are consistent and asymptotically normally distributed with an asymptotic covariance matrix that accounts for possible conditional quantile model misspecification and which can be consistently estimated by using the tick-exponential scores and Hessian matrix. Despite its non-differentiability, the tick-exponential quasi-likelihood is easy to maximize by using a ‘minimax’ representation not seen in the earlier work on conditional quantile estimation.     

Smoothly mixing regressions

This paper extends the conventional Bayesian mixture of normals model by permitting state probabilities to depend on observed covariates. The dependence is captured by a simple multinomial probit model. A conventional and rapidly mixing MCMC algorithm provides access to the posterior distribution at modest computational cost. This model is competitive with existing econometric models, as documented in the paper's illustrations. The first illustration studies quantiles of the distribution of earnings of men conditional on age and education, and shows that smoothly mixing regressions are an attractive alternative to nonBayesian quantile regression. The second illustration models serial dependence in the S&P 500 return, and shows that the model compares favorably with ARCH models using out of sample likelihood criteria.     

Generational Dimensions of Neoliberal and Post‐Fordist Restructuring: The Changing Characteristics of Young Adults and Growing Income Inequality in Montreal and Vancouver

There is growing concern over income inequality and its generational dimensions. Post‐Fordist and neoliberal restructuring have reshaped urban labour markets, resulting in growing inequalities that disproportionately afflict younger workers. This article empirically analyses the transition as experienced in Montreal and Vancouver, two Canadian cities that have undergone restructuring in different ways. The study of young adults' changing incomes reveals growing intra‐ and inter‐cohort inequality, and an increasing intergenerational income gap in both cities. Income inequality is greater in Vancouver, with its more pronounced post‐Fordist labour force composition and neoliberalized governance context. Known factors such as occupation and gender affect the earnings structure, but educational attainment has increased the most in terms of its effect on incomes. Inequalities among young adults are expected to magnify in the future due to unevenness in educational attainment. Urban research ought to pay close attention to the role of education in structuring inequalities, and the ways the impact of restructuring is unevenly distributed across generations.