Status Traps

Steven Durlauf, Andros Kourtellos (andros@ucy.ac.cy) and Chih Ming Tan
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Andros Kourtellos: Department of Economics, University of Cyprus, Cyprus; The Rimini Centre for Economic Analysis, Italy

Working Paper series from Rimini Centre for Economic Analysis

Abstract: In this paper, we explore nonlinearities in the intergenerational mobility process using threshold regression models. We uncover evidence of threshold effects in children’s outcomes based on parental education and cognitive and non-cognitive skills as well as their interaction with offspring characteristics. We interpret these thresholds as organizing dynastic earnings processes into "status traps". Status traps, unlike poverty traps, are not absorbing states. Rather, they reduce the impact of favorable shocks for disadvantaged children and so inhibit upward mobility in ways not captured by linear models. Our evidence of status traps is based on three complementary datasets; i.e., the PSID, the NLSY, and US administrative data at the commuting zone level, which together suggest that the threshold-like mobility behavior we observe in the data is robust for a range of outcomes and contexts.

Date: 2016-05
New Economics Papers: this item is included in nep-ltv and nep-neu
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:16-13

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