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THE INTERGENERATIONAL CORRELATION BETWEEN CHILDREN'S ADULT EARNINGS AND THEIR PARENTS' INCOME: RESULTS FROM THE MICHIGAN PANEL SURVEY OF INCOME DYNAMICS
Note: The authors are Professors of Economics, Co-Directors of CHAFE (Center for Household and Family Economics) and members of the Population Studies Center at the University of Pennsylvania. The usual disclaimer about responsibility holds. We thank NIH for support for this study, Myung K. Kang for able research assistance, and two anonymous referees for useful comments and suggestions.
Abstract
Intergenerational correlations between parental income and child earnings reflect the extent of intergenerational economic mobility and equality of opportunity. Previous estimates are about 0.2, but these estimates suffer from a number of problems, including the use of but one year of observations and of nonrandom samples. We present new estimates based on the Panel Study of Income Dynamics. These estimates suggest correlations over 0.5 with longer-run income and earning measures, as well as some gender and race differences and some impact of liquidity constraints. They also suggest that the intergenerational elasticity is greater as parental income increases, the opposite of the Becker-Tomes conjecture.