Rich Dad, Smart Dad: Decomposing the Intergenerational Transmission of Income

Lars Lefgren (), Matthew Lindquist and David Sims ()
Additional contact information
David Sims: Brigham Young University, Postal: Department of Economics , Brigham Young University , 130 Faculty Office Building , Provo, UT 84602-2363, USA

No 2009:19, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: We construct a simple model, consistent with Becker and Tomes (1979), that decomposes the intergenerational income elasticity into the causal effect of financial resources, the mechanistic transmission of human capital, and the role that human capital plays in the determination of father’s permanent income. We show how a particular set of instrumental variables could separately identify the money and human capital transmission effects. We further outline two instrumental variables methods for bounding the structural parameters of our model in the presence of imperfect instruments. Using data from a thirty-five percent sample of Swedish sons and their fathers, we show that only a minority of the intergenerational income elasticity can be plausibly attributed to the causal effect of fathers’ financial resources.

Keywords: financial resources; human capital; intergenerational income elasticity; intergenerational mobility; permanent income (search for similar items in EconPapers)
JEL-codes: J62 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2009-12-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www2.ne.su.se/paper/wp09_19.pdf (application/pdf)

Related works:
Journal Article: Rich Dad, Smart Dad: Decomposing the Intergenerational Transmission of Income (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:2009_0019

Access Statistics for this paper

More papers in Research Papers in Economics from Stockholm University, Department of Economics Department of Economics, Stockholm, S-106 91 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Anne Jensen ( this e-mail address is bad, please contact ).