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Explaining Intergenerational Mobility: The Role of Fertility and Family Transfers

Diego Daruich () and Julian Kozlowski ()

No 2018-11, Working Papers from Federal Reserve Bank of St. Louis

Abstract: Poor families have more children and transfer less resources to them. This suggests that family decisions about fertility and transfers dampen intergenerational mobility. To evaluate the quantitative importance of this mechanism, we extend the standard heterogeneous agent life cycle model with earnings risk and credit constraints to allow for endogenous fertility, family transfers, and education. The model, estimated to the US in the 2000s, implies that a counterfactual flat income-fertility profile would-through the equalization of initial conditions-increase intergenerational mobility by 6%. The impact of a counterfactual constant transfer per child is twice as large.

Keywords: Inequality; Intergenerational mobility; Fertility (search for similar items in EconPapers)
JEL-codes: D91 J13 J24 J62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dem, nep-dge and nep-gro
Date: 2016-11-16, Revised 2018-10-17
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DOI: 10.20955/wp.2018.011

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