Empirical Strategies to Eliminate Life-Cycle Bias in the Intergenerational Elasticity of Earnings Literature

Jan Stuhler

No 346, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: I argue that the empirical strategies for estimation of the intergenerational elasticity of lifetime earnings that are currently employed in the literature might not eliminate bias arising from life-cycle effects. Specifically, I demonstrate that procedures based on the generalized errors-in-variables model suggested by Haider and Solon (2006) or the consideration of differential earnings growth rates across subpopulations may not yield unbiased or consistent estimates. I further argue that instrumental variable estimators will not identify an upper bound for the true population parameter.

Keywords: intergenerational mobility; intergenerational elasticity of earnings; life-cycle bias; generalized errors-in-variables model (search for similar items in EconPapers)
JEL-codes: C23 J62 (search for similar items in EconPapers)
Pages: 31 p.
Date: 2010
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Empirical Strategies to Eliminate Life-Cycle Bias in the Intergenerational Elasticity of Earnings Literature (2010)
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