Working Paper Series
IFAU - Institute for Evaluation of Labour Market and Education Policy
Biases in standard measures of intergenerational income dependence
() and Jan Stuhler
Abstract: Estimates of the most common mobility measure, the
intergenerational elasticity, can be severely biased if snapshots are used
to approximate lifetime income. However, little is known about biases in
other popular dependence measures. We use long Swedish income series to
provide such evidence for linear and rank correlations, and rank-based
transition probabilities. Attenuation bias is considerably weaker in
rank-based measures. Life-cycle bias is strongest in the elasticity;
moderate in the linear correlation; and small in rank-based measures.
However, with important exceptions: persistence in the tails of the
distribution is considerably higher, and long-distance downward mobility
considerably lower, than estimates from short-run income suggest.
Keywords: Intergenerational mobility; correlation; measurement error; (follow links to similar papers)
JEL-Codes: J62; (follow links to similar papers)
25 pages, June 15, 2015
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- This paper is published as:
Nybom, Martin and Jan Stuhler, (2017), 'Biases in standard measures of intergenerational income dependence', The Journal of Human Resources, Vol. 52, July, No. 3, pages 800-825
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