Intergenerational Mobility & Inequality: Comments on Oren Heller Michael Beenstock Hebrew University of Jerusalem
Dynamics of Intergenerational Inequality Yc Y p uc uc u p c int ergenerati onal autocorrel ation
2 Yc
2 Yp
2
2 up
2 c
( 2 ) 1 2 2 Y* steady state 2 2 (1 )(1 )(1 )
Consistency of βols p lim ˆols p lim
cov(u p y p ) var( y p )
cov(u p y p ) var(u p ) cov(u p y g ) ˆols
yc y p uˆ p c y p X p u p
generated regressor
Selection bias induced by yc = 0 & yp > 0 Also yc > 0* & yp = 0 yc zc w
yc 0 if y 0 * c
prob ( yc 0) ( zc )
yc y p uc uc corr (uc w)
Gini & Sigma Convergence Gc Yp G p cp Yc cp
cov(Yc R p ) cov(Yc Rc )
relative immobility
absolute immobility c p rcp
Intergenerational Dynamics: Israel (Matched Census 1983-1995) Correlation
Gini Mobility
Schoolyears
0.32
0.63
Earnings
0.04
0.88
Permanent earnings
0.28 (Solon)
0.79
Sibling Correlations (Census 1995) schooling
earnings
Brother sister
0.435
0.221
brothers
0.417
0.304
sisters
0.561
0.165
Sibling Correlation rs b (1 b)r
2 cp
2 b 2 2 (1 ) yc y p y s c
ˆ schooling 0.308 ˆ earnings 0.103
Education & Income: Very weak intergenerational transmission of Ep to Yc log Yc log Yp Ec log Ec log E p v var(log Yc ) 2 var( Ec ) 2 var(log Y p ) 2 var(log Ec ) 2 var(log E p ) v2 var( Ec ) {exp[var(log Ec )] 1}[ E ( Ec )]2
0.1 0.25 0.35
Conclusions • Intergenerational transmission of inequality is weak due to high mobility • Especially in Israel • “Tabula Rasa”: Locke • Inequality induced by family: Rousseau • Larger families have more sibling interaction: induces inequality • Focus on lowest and highest deciles?