The effects of measurement error and omitted variables when using transition matrices to measure intergenerational mobility

Donal O’Neill (), Olive Sweetman and Dirk Van de gaer
Authors registered in the RePEc Author Service: Donal O'Neill

The Journal of Economic Inequality, 2007, vol. 5, issue 2, 159-178

Abstract: This paper examines the consequences of specification error when transition matrices are used to analyse patterns of intergenerational mobility. We show that classical measurement error in both the child’s and parent’s earnings can lead to biased results, with summary mobility measures biased by as much as 20% in some cases. Furthermore our results suggest that the extent of the bias is most severe in the tails of the distribution. Omitted conditioning variables appear to have a modest effect on transition matrices in our model. Copyright Springer Science+Business Media, Inc. 2007

Keywords: transition matrices; specification error; intergenerational mobility (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (29)

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Working Paper: The effects of measurement error and omitted variables when using transition matrices to measure intergenerational mobility (2007)
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DOI: 10.1007/s10888-006-9035-7

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