Human Capital, Heterogeneity, and Estimated Degrees of Intergenerational Mobility
with Song Han
Some of the important implications of the parental investment model of
intergenerational mobility have been derived under the assumption that
parental income is the main source of heterogeneity. We explicitly
model the variability and inheritability of "innate" earnings ability and
the variability of tastes, showing how they affect observed
intergenerational consumption and earnings mobility. Heteregeneity
increases the difficulty of detecting the existence of
borrowing constrained families. Conversely, the presence of heteregeneity means
that economic and linear statistical models of inheritance generate similar
intergenerational data on consumption and earnings. In this sense, our findings
offer some support for Goldberger's (1989) criticism of human capital models of
inheritance. Finally, we suggest that any cross-country differences in intergenerational
earnings mobility are more readily interpreted according to the heterogeneity of inherited
ability, rather than optimal family responses to country-specific institutions for
accumulating human capital.
Hard and electronic copies of the paper are circulated as:
- NBER Working Paper No. 7678, April 2000.
© copyright 1997-2000 by Song Han and Casey B. Mulligan.