Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2013:2: A test of the Becker-Tomes model of human capital transmission using microdata on four generations

Mikael Lindahl (), Mårten Palme (), Sofia Sandgren Massih and Anna Sjögren
Additional contact information
Mikael Lindahl: Uppsala University, CESifo, IFAU, IZA and UCLS, Postal: Department of Economics, Uppsala University, SE-751 20 Uppsala, Sweden
Mårten Palme: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Sofia Sandgren Massih: Uppsala University, Postal: Department of Economics, Uppsala University, SE-751 20 Uppsala, Sweden
Anna Sjögren: IFAU, UCLS and SOFI Stockholm University, Postal: IFAU, Box 513, SE-751 20, Uppsala, Sweden,

Abstract: We estimate the well-known Becker-Tomes (1986) model of intergenerational transmission of human capital. A Swedish data set which links individual measures on educational attainments of four generations, enables us to use great grandparents’ education as an instrumental variable. This approach was suggested already in Becker- Tomes (1986) but, because of the lack of data, never implemented. The identifying assumption, which holds within the Becker-Tomes framework, is that great grandparents’ education is unrelated to great grandchild’s education, conditional on the education of the parent and grandparent. We test the prediction that the structural parameter for grandparents’ education enters with a negative sign in an intergenerational regression model where the education of a child is linearly related to the education of the parent and the education of the grandparent. We fail to find empirical support for the model’s predictions.

Keywords: The Becker-Tomes model; Human capital transmission; Multigenerational effects

JEL-codes: D31; J62

17 pages, January 16, 2013

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