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

Jan Stuhler

No 5245, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: generalized errors-in-variables model; intergenerational mobility; intergenerational elasticity of earnings; life-cycle bias (search for similar items in EconPapers)
JEL-codes: C23 J62 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-10
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Citations: View citations in EconPapers (4)

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