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Department of Economics, University of Bergen Working Papers in Economics, Department of Economics, University of Bergen

No 04/08:
Sources of Measurement Errors in Earnings Data: New Estimates of Intergenerational Elasticities

Řivind Anti Nilsen (), Kjell Vaage (), Arild Aakvik () and Karl Jacobsen ()

Abstract: Using 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 in Norway. Extending the length of the fathers’ earnings windows from 5 to 30 years increases the estimated elasticities. Varying 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. Biases in the estimated elasticities appear to be related to age and/or life-cycle measurement errors more than persistency in the transitory innovations.

Keywords: Intergenerational mobility; measurement error.; (follow links to similar papers)

JEL-Codes: C23; J62; (follow links to similar papers)

22 pages, April 23, 2008

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