Human Capital, Heterogeneity, and Estimated Degrees of Intergenerational Mobility

Song Han and Casey Mulligan

No 7678, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Some of the important implications of the parental investment model of intergenerational mobility have been derived under the assumption that parental income is the main source of heterogeneity. We explicitly model the variability and inheritability of innate' earnings ability and the variability of tastes, showing how they affect observed degrees of intergenerational consumption and earnings mobility. Heterogeneity increases the difficulty of detecting the existence of borrowing constrained families. Conversely, the presence of heterogeneity means that economic and linear statistical models of inheritance generate similar intergenerational data on consumption and earnings. In this sense, our findings offer some support for Goldberger's (1989) criticism of human capital models of inheritance. Finally, we suggest that any cross-country differences in intergenerational earnings mobility are more readily interpreted according to the heterogeneity of inherited ability, rather than optimal family responses to country-specific institutions for accumulating human capital.

JEL-codes: J24 J62 (search for similar items in EconPapers)
Date: 2000-04
New Economics Papers: this item is included in nep-edu and nep-lab
Note: LS
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Citations: View citations in EconPapers (11)

Published as Han, Song and Casey B. Mulligan. "Human Capital, Heterogeneity And Estimated Degrees Of Intergenerational Mobility," Economic Journal, 2001, v111(470,Apr), 207-243.

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Journal Article: Human Capital, Heterogeneity and Estimated Degrees of Intergenerational Mobility (2001)
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