Scandinavian Working Papers in Economics

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

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

Øivind Anti Nilsen (), Kjell Vaage (), Arild Aakvik () and Karl Jacobsen ()
Additional contact information
Øivind Anti Nilsen: Department of Economics, Norwegian School of Economics and Business Administration, Postal: Hellevn. 30, NO-5045 Bergen, Norway
Kjell Vaage: Department of Economics, University of Bergen,, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway
Arild Aakvik: Department of Economics, University of Bergen, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway
Karl Jacobsen: Statistics Norway, Research Department, Postal: P.O.Box 8131 Dep., N-0033 Oslo, Norway

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.

JEL-codes: C23; J62

22 pages, April 23, 2008

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