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Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons

Bernt Bratsberg (), Knut Røed (), Oddbjørn Raaum (), Robin Naylor (), Markus Jantti, Tor Eriksson () and Eva Österbacka
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Eva Österbacka: Åbo Akademi University

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We show that the patterns of intergenerational earnings mobility in Denmark, Finland, and Norway, unlike those for the US and the UK, are highly nonlinear. The Nordic relationship between log earnings of sons and fathers is flat in the lower segments of the fathers’ earnings distribution – sons growing up in the poorest households have the same adult earnings prospects as sons in moderately poor households – and is increasingly positive in middle and upper segments. This convex pattern contrasts sharply with our findings for the United States and the United Kingdom, where the relationship is much closer to being linear. As a result, cross-country comparisons of intergenerational earnings elasticities may be misleading with respect to transmission mechanisms in the central parts of the earnings distribution, and uninformative in the tails of the distribution.

JEL-codes: J3 J62 (search for similar items in EconPapers)
Date: 2007
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Journal Article: Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons (2007) Downloads
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