Reconsidering the Use of Nonlinearities in Intergenerational Earnings Mobility as a Test for Credit Constraints
Intergenerational earnings regression among Canadian men is nonlinear; middle-earning families experience slower regression. This pattern appears to confirm economic models of educational choice with credit constraints. This paper reexamines the economic model and finds no connection between credit markets and earnings regression nonlinearities. In particular, credit constraints need not produce concavity and concavity does not imply credit market failure. Despite the invalidity of the test, data availability will likely lead to continued research along this path. The paper proposes an amended test using quantile regressions. Applied to Canadian data, the simple liquidity constraint conclusion is rejected.
Year of publication: |
2004
|
---|---|
Authors: | Grawe, Nathan D. |
Published in: |
Journal of Human Resources. - University of Wisconsin Press. - Vol. 39.2004, 3
|
Publisher: |
University of Wisconsin Press |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Primary and Secondary School Quality and Intergenerational Earnings Mobility
Grawe, Nathan D., (2010)
-
A Simulation of Counter-Cyclical Intervention: Some Practical Lessons
Grawe, Nathan D., (2007)
-
The three-day week of 1974 and measurement error in the FES and NCDS data sets
Grawe, Nathan D., (2002)
- More ...