The Intergenerational Elasticity of Earnings: Exploring the Mechanisms

Eric French, Jamie Hentall MacCuish, O’Dea, Cormac and Uta Bolt
Authors registered in the RePEc Author Service: Cormac O'Dea

No 15975, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: How do education, skills, investments of parental time and school quality, and family circumstances during childhood contribute to the persistence of earnings across generations? Building on a classic literature in sociology and a more recent literature in economics, our model allows each of the above variables to affect lifetime earnings directly, as well as through their contribution to human capital formation. The model allows us to decompose the intergenerational elasticity of earnings (IGE) into its drivers. Using data from a representative British cohort followed from birth to age 55, we show the above variables explain most of the IGE. A key driver is the increased levels of parental investments received by children of high income parents early in their lives, and the resulting cognitive development.

Keywords: Parental investments; Cognitive skills; Intergenerational elasticity of earnings (search for similar items in EconPapers)
JEL-codes: C38 I24 J24 (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-dem and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Working Paper: The Intergenerational Elasticity of Earnings: Exploring the Mechanisms * (2024)
Working Paper: The intergenerational elasticity of earnings: Exploring the mechanisms (2024)
Working Paper: The Intergenerational Elasticity of Earnings: Exploring the Mechanisms (2021)
Working Paper: The intergenerational elasticity of earnings: exploring the mechanisms (2021)
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