Some of the important implications of the parental investment model of intergenerational mobility have been derived under the assumption that parental income is the only source of heterogeneity.

COMPUSTAT data on 12,000 firms for the years 1956-1992 indicate that large firms hold less M1 as a percentage of sales that do small ones. Whether comparisons are made within or across industries, the elasticity of M1 balances with respect to sales is about 0.75. Firms headquartered in counties...