Biases in standard measures of intergenerational income dependence

Martin Nybom and Jan Stuhler

No 2015:13, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: Estimates of the most common mobility measure, the intergenerational elasticity, can be severely biased if snapshots are used to approximate lifetime income. However, little is known about biases in other popular dependence measures. We use long Swedish income series to provide such evidence for linear and rank correlations, and rank-based transition probabilities. Attenuation bias is considerably weaker in rank-based measures. Life-cycle bias is strongest in the elasticity; moderate in the linear correlation; and small in rank-based measures. However, with important exceptions: persistence in the tails of the distribution is considerably higher, and long-distance downward mobility considerably lower, than estimates from short-run income suggest.

Keywords: Intergenerational mobility; correlation; measurement error (search for similar items in EconPapers)
JEL-codes: J62 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2015-06-15
New Economics Papers: this item is included in nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Published as Nybom, Martin and Jan Stuhler, 'Biases in standard measures of intergenerational income dependence' in The Journal of Human Resources, 2017, pages 800-825.

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Journal Article: Biases in Standard Measures of Intergenerational Income Dependence (2017)
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