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Breaking the Links: Natural Resource Booms and Intergenerational Mobility

Aline Bütikofer, Antonio Dalla-Zuanna () and Kjell G Salvanes ()
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Antonio Dalla-Zuanna: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway

No 19/2018, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: Do large economic shocks increase intergenerational earnings mobility through creating new economic opportunities? Alternatively, do they reduce mobility by reinforcing the links between generations? In this paper, we estimate how the Norwegian oil boom starting in the 1970s affected intergenerational mobility. We find that this resource shock increased intergenerational mobility for cohorts entering the labor market at the beginning of the oil boom in those labor markets most affected by the growing oil industry. In particular, we show that individuals born to poor families in oil-affected regions were more likely to move to the top of their cohort's earnings distribution. Importantly, we reveal that preexisting local differences in intergenerational mobility did not drive these findings. Instead, we show that changes in the returns to education offer the best explanation for geographic differences in intergenerational mobility following the oil boom. In addition, we find that intergenerational mobility was significantly higher in oil-affected labor markets across three generations and that the oil boom broke the earnings link between grandfathers and their grandsons.

Keywords: Natural Resource Booms; International mobility (search for similar items in EconPapers)
JEL-codes: J62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-lab
Date: 2018-09-06
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