We extend the standard intergenerational mobility literature by modelling individual outcomes as a function of the history of parental income, as opposed to a single measure of parental income. Using data for 500,000 individuals in Norway, we present semi-parametric estimates of the effect of the timing of parental income on outcomes measured
when an individual is in his early 20s. We find that schooling is maximized when permanent income is high, and income is balanced across periods. To interpret our findings we simulate models of parental investment in children with more than one period of childhood, under different assumptions about credit markets and the information sets of parents. Simple models emphasizing borrowing constraints do not explain our findings. More promising models feature uncertainty about income shocks, child endowments, and the technology of skill formation.
Presented by:
Emma Tominey (University of York)
Date & time:
November 26, 2012 4:00 pm
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