| By: |
Paul Bingley (SFI, The Danish National Centre for Social Research);
Lorenzo Cappellari (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore) |
| Abstract: |
We model the correlations of brothers’ earnings isolating the effect of
fathers’ earnings from additional residual influences shared between brothers.
We separate the two effects by analysing sibling correlations and
intergenerational correlations jointly within a unified framework. Our
multi-person model of earnings dynamics distinguishes permanent from
transitory shocks, allows for heterogeneous life cycle effects and nests
previous models. Using data on the Danish population of
father/first-son/second-son triplets, we corroborate the findings of studies
that do not account for life cycle effects for those aged in their 30’s, but
find correlations twice as large at 25. The impact of intergenerational
effects also varies over age, but is everywhere higher than found in previous
studies ?by on average a factor of thirteen? and accounts for most of the
sibling correlation. We provide evidence that lack of both life cycle effects
and heterogeneous intergenerational transmission across families in previous
studies explain the difference. When allowing for differential
intergenerational transmission within families, we find mild evidence of
stronger transmission to second sons. |
| Keywords: |
Sibling correlation, Intergenerational transmission, Life cycle earnings |
| JEL: |
D31 J62 |
| Date: |
2013–11 |
| URL: |
http://d.repec.org/n?u=RePEc:ctc:serie1:def6&r=evo |