Estimates of Intergenerational Elasticities Based on Lifetime Earnings

Oivind A Nilsen1, Kjell Vaage2, Arild Aakvik 2, Karl Jacobsen3
1Norwegian School of Economics and BA, Norway, 2University of Bergen, Norway, 3Statistics Norway, Norway

Using Norwegian intergenerational data with a substantial part of the life-cycle earnings of children and almost the entire life-cycle earnings for their fathers, we present new estimates of intergenerational mobility. Extending the length of the fathers’ earnings windows from 5 to 30 years increases the estimated elasticities. Increasing the age of father at observation has the opposite effect. Our findings indicate that intergenerational earnings mobility may have been strongly overstated in many earlier studies with shorter earnings histories, also in former Norwegian studies. Biases in the estimated elasticities are both to life-cycle measurement errors and to persistency in the transitory innovations.

View full paper