What is the source of the intergenerational correlation in earnings?

George-Levi Gayle, Limor Golan and Mehmet Soytas ()

Journal of Monetary Economics, 2022, vol. 129, issue C, 24-45

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.

Keywords: Intergenerational models; Estimation; discrete choice; Human capital; Panel study of income dynamics (search for similar items in EconPapers)
JEL-codes: C13 J13 J22 J62 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: What Is The Source Of The Intergenerational Correlation In Earnings? (2016)
Working Paper: What is the source of the intergenerational correlation in earnings? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:129:y:2022:i:c:p:24-45

DOI: 10.1016/j.jmoneco.2022.04.007

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