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Local Intergenerational Elasticities

Author

Listed:
  • Brantly Callaway

    (Department of Economics, Temple University)

  • Weige Huang

    (Wenlan School of Business, Zhongnan University of Economics and Law)

Abstract

The intergenerational elasticity (IGE) is the most common parameter reported in the intergenerational mobility literature. This paper proposes a "local" intergenerational mobility parameter (LIGE) that allows the effect of parents' income to vary across different values of parents' income. We also extend this result to an "adjusted" local intergenerational elasticity (ALIGE) which adjusts for differences in the distribution of observed characteristics at different values of parents' income. We develop the asymptotic properties of the LIGE and ALIGE, and apply them to study intergenerational mobility using data from the PSID. We find that the intergenerational elasticity is much larger for low values of parents' income (indicating less mobility) relative to high values of parents' income; adjusting for differences in characteristics reduces the local IGE at all values of parents' income as well as flattening it across different values of parents' income.

Suggested Citation

  • Brantly Callaway & Weige Huang, 2019. "Local Intergenerational Elasticities," Economics Bulletin, AccessEcon, vol. 39(2), pages 919-928.
    • Handle: RePEc:ebl:ecbull:eb-18-00689
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    References listed on IDEAS

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    Cited by:

    1. Brantly Callaway & Tong Li & Irina Murtazashvili, 2021. "Distributional Effects with Two-Sided Measurement Error: An Application to Intergenerational Income Mobility," Papers 2107.09235, arXiv.org, revised Jun 2024.
    2. Brantly Callaway & Weige Huang, 2020. "Distributional Effects of a Continuous Treatment with an Application on Intergenerational Mobility," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(4), pages 808-842, August.

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    More about this item

    Keywords

    Intergenerational Income Mobility; Local Linear Estimation; Smooth Coefficient Model;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

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