Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2012:12: The intergenerational persistence of human capital: an empirical analysis of four generations

Mikael Lindahl (), Mårten Palme (), Sofia Sandgren Massih and Anna Sjögren ()
Additional contact information
Mikael Lindahl: Department of Economics, Uppsala University, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Mårten Palme: Department of Economics, Stockholm University, Postal: SE-106 91 Stockholm, Sweden
Sofia Sandgren Massih: Department of Economics, Uppsala University, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Anna Sjögren: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: P O Box 513, SE-751 20 Uppsala, Sweden

Abstract: Most previous studies of intergenerational transmission of human capital are restricted to two generations – parents and their children. In this study we use a Swedish data set which enables us link individual measures of lifetime earnings for three generations and data on educational attainments of four generations. We investigate to what extent estimates based on income data from two generations accurately predicts earnings persistence beyond two generations. We also do a similar analysis for intergenerational persistence in educational attainments. We find two-generation studies to severely under-predict intergenerational persistence in earnings and educational attainment over three generations. Finally, we use our multigenerational data on educational attainment to estimate the structural parameters in the Becker-Tomes model. Our results suggest a small or no causal effect of parental education on children’s educational attainment.

Keywords: Intergenerational income mobility; Human capital transmission; Multigenerational income mobility

JEL-codes: D31; J62

30 pages, June 8, 2012

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