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Earnings persistence across generations: Transmission through health?

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Author Info
Eriksson, Tor () (Aarhus School of Business, Department of Economics)
Bratsberg, Bernt () (The Ragnar Frisch Centre for Economic Research)
Raaum, Oddbjørn () (The Ragnar Frisch Centre for Economic Research)

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Abstract

Using a unique data set that links adult labour market outcomes and health status of a cohort of Danes and their parents, we study the interrelationships between transmission of health and economic status across generations. We first establish new evidence on intergenerational earnings resemblance in Denmark, obtaining estimates of father-child earnings elasticities of .29 for sons and .27 for daughters. Next, we show that children from low-income families are more likely to experience health problems in adulthood, and that poor health outcomes, such as back illness, heart disease, and psychological illness, affect labour earnings negatively. The data further reveal strong correlations of health outcomes across generations. When we condition on health status, estimates of the intergenerational earnings elasticity drop by a substantial amount—28 percent for sons and 25 percent for daughters. These findings point to parental investments in health and resemblance of health across generations as factors behind the pattern of low intergenerational earnings mobility observed in many countries.

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Paper provided by Oslo University, Department of Economics in its series Memorandum with number 35/2005.

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Length: 26 pages
Date of creation: 30 Dec 2005
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Handle: RePEc:hhs:osloec:2005_035

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Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
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Related research
Keywords: Intergenerational mobility; health and earnings;

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Find related papers by JEL classification:
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Markus Jäntti & Bernt Bratsberg & Knut Røed & Oddbjørn Raaum & Robin Naylor & Eva Österbacka & Anders Björklund & Tor Eriksson, 2006. "American Exceptionalism in a New Light: A Comparison of Intergenerational Earnings Mobility in the Nordic Countries, the United Kingdom and the United States," IZA Discussion Papers 1938, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Janet Currie & Enrico Moretti, 2005. "Biology as Destiny? Short and Long-Run Determinants of Intergenerational Transmission of Birth Weight," NBER Working Papers 11567, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Janet Currie, 2008. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," NBER Working Papers 13987, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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