Because the permanent incomes of parents and children are typically unobservable, the estimation of the intergenerational correlation of incomes is usually carried out via averaging methods or instrumentation. In this paper we take the permanent income of the parent family to be unobserved, but...

We consider the problem of estimating the intergenerational correlation of incomes in the context of a panel data framework with measurement errors. We present single equation estimation methods as well as system methods under various assumptions regarding the serial correlation of the error...

Because the permanent incomes of parents are children are typically unobserved, the estimation of the intergenerational correlation via the use of proxy variables entails an errors-in-variables bias. By solving a system of moment equations for income observed at a given year, and a T-period...

Using a US sample of parents and children, we examine income distribution in two generations. We find that the mean of the children's distribution is higher than that of parents', but incomes were more equally distributed in the lower deciles of the latter distribution. Groups of children raised...

The prediction approach proposed by Dearden, Machin and Reed (DMR) consists in (1) regressing the observed incomes of the child and parent families on separate sets of predetermined variables, and (2) regressing the child's predicted income on that of the parents. Conceptually, this estimator...

An emerging literature in the field of income distribution suggests that inequality may persist in the long run. U.S. father and son income data extracted from the PSID support the hypothesis that the distribution of earnings of children raised in privileged environments welfare-dominates that...

Averaging methods are routinely used in order to limit biases resulting from the mismeasurement of permanent incomes. The Solon/Zimmerman estimator regresses a single-year measurement of the child's resources on a T-period average of the parents' income while the Behrman/Taubman estimator...

The OLS estimator of the intergenerational earnings correlation is biased towards zero, while the instrumental variables estimator is biased upwards. The first of these results arises because of measurement error, while the latter rests on the presumption that the education of the parent family...