Scandinavian Working Papers in Economics

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

No 2016:19: Dynastic human capital, inequality and intergenerational mobility

Adrian Adermon (), Mikael Lindahl () and Mårten Palme ()
Additional contact information
Adrian Adermon: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: Institute for Evaluation of Labour Market and Education Policy, P O Box 513, SE-751 20 Uppsala, Sweden
Mikael Lindahl: Department of Economics, University of Gothenburg; IFAU; IZA; UCLS; CESifo
Mårten Palme: Department of economics, Stockholm University; IZA

Abstract: We study the importance of the extended family – or the dynasty – for the persistence in human capital inequality across generations. We use data including the entire Swedish population, linking four generations. This data structure enables us to – in addition to parents, grandparents and great grandparents – identify parents’ siblings and cousins, as well as their spouses, and the spouses’ siblings. We introduce and estimate a new parameter, which we call the intergenerational transmission of dynastic inequality. This parameter measures the between-dynasty variation in intergenerational transmission of human capital. We use three different measures of human capital: years of schooling, family income and an index of occupational status. Our results show that traditional parent-child estimates miss about half of the persistence across generations estimated by the extended model.

Keywords: intergenerational mobility; extended family; dynasty; human capital

JEL-codes: I24; J62

62 pages, November 7, 2016

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