Correlation of Brothers Earnings and Intergenerational Transmission

Paul Bingley () and Lorenzo Cappellari
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Paul Bingley: SFI, The Danish National Centre for Social Research

No def006, DISCE - Working Papers del Dipartimento di Economia e Finanza from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: We model the correlations of brothers’ earnings isolating the effect of fathers’ earnings from additional residual influences shared between brothers. We separate the two effects by analysing sibling correlations and intergenerational correlations jointly within a unified framework. Our multi-person model of earnings dynamics distinguishes permanent from transitory shocks, allows for heterogeneous life cycle effects and nests previous models. Using data on the Danish population of father/first-son/second-son triplets, we corroborate the findings of studies that do not account for life cycle effects for those aged in their 30’s, but find correlations twice as large at 25. The impact of intergenerational effects also varies over age, but is everywhere higher than found in previous studies ?by on average a factor of thirteen? and accounts for most of the sibling correlation. We provide evidence that lack of both life cycle effects and heterogeneous intergenerational transmission across families in previous studies explain the difference. When allowing for differential intergenerational transmission within families, we find mild evidence of stronger transmission to second sons.

Keywords: Sibling correlation; Intergenerational transmission; Life cycle earnings (search for similar items in EconPapers)
JEL-codes: D31 J62 (search for similar items in EconPapers)
Pages: 47
Date: 2013-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (49)

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http://dipartimenti.unicatt.it/economia-finanza-def006.pdf First version, 2013 (application/pdf)

Related works:
Working Paper: Correlations of Brothers' Earnings and Intergenerational Transmission (2017)
Working Paper: Correlations of Brothers' Earnings and Intergenerational Transmission (2017)
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