INTERGENERATIONAL MOBILITY AND SOCIAL STATUS IN A MODEL WITH HUMAN CAPITAL INVESTMENTS AND TRAIT INHERITANCE

Rainer Andergassen and Franco Nardini

Macroeconomic Dynamics, 2021, vol. 25, issue 3, 776-794

Abstract: We study a model in which parents care about the economic and social status of their offspring. The chances of an individual achieving social status depends on innate traits, that is, IQ, ability, social and cultural environment, and other price-insensitive endowments, passed on by their parents, on human capital investments and on chance events. Parents can, through human capital investments, increase the offspring’s probability of climbing the social ladder, although they cannot borrow against the children’s perspective earning. Consequently, income and trait heterogeneity are the determinants of unequal opportunities and of intergenerational mobility.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:25:y:2021:i:3:p:776-794_10

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