Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2019:2: Dynastic Human Capital, Inequality and Intergenerational Mobility

Adrian Adermon (), Mikael Lindahl () and Mårten Palme ()
Additional contact information
Adrian Adermon: Institute for Evaluation of Labor Market and Education Policy (IFAU), Postal: Kyrkogårdsgatan 6, Box 513 , 751 20 Uppsala, Sweden
Mikael Lindahl: Department of Economics, University of Gothenburg, Postal: Department of Economics, University of Gothenburg, PO Box 640, SE405 30 Göteborg, Sweden
Mårten Palme: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: We study the importance of the extended family – the dynasty – for the persistence in inequality across generations. We use data including the entire Swedish population, linking four generations. This data structure enables us to identify parents’ siblings and cousins, their spouses, and the spouses’ siblings. Using various human capital measures, we show that traditional parent-child estimates of intergenerational persistence miss almost one-third of the persistence found at the dynasty level. To assess the importance of genetic links, we use a sample of adoptees. We then find that the importance of the extended family relative to the parents increases.

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

JEL-codes: I24; J62

46 pages, April 11, 2019

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