Assortative mating and family links in permanent earnings
RAND, 1997 - Family - 37 pages
This paper provides a number of new results regarding the contribution of family background to individual permanent earnings. First, the authors show that sibling correlations include a gender-neutral family component associated with having the same parents and gender-specific components shared by only same-sex siblings. The magnitude of these sibling links is robust to generalization of the transitory earnings component to an auto-regressive moving average. The measured contribution of parents' earnings to the permanent earnings of their sons and daughters is quite sensitive to the specification of the transitory earnings component of the parents, which is measurement error in a model of intergenerational links. Accounting for autocorrelation in parents earnings more than doubles the apparent effects of father's permanent earnings on that of both sons and daughters. Father's and mother's permanent earnings are strongly linked, indicating positive assortative mating in that dimension. The net direct contribution of mother's permanent earnings on her children is effectively zero. Children also positively assortatively mate on permanent earnings, and the correlation in permanent earnings of women who marry brothers and men who marry sisters is explained completely by the family components of the brothers and the sisters.
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age effects Altonji and Dunn Behrman and Taubman children's earnings children's permanent earnings coefficients common component shared component of permanent contribution of family contribution of fathers correlation covariance daughters share earnings of mothers earnings of sons error structure family background components family components family links family members family-wide component father's earnings fathers and mothers four columns gender-specific sibling components Huber standard errors husbands of sisters individual components individual earnings individual-specific components individuals related intergenerational earnings transmission intergenerational mobility John Strauss Labor and Population Lillard literature ln-L marriage market married MLE Estimates mother-specific mother's permanent earnings moving average multivariate normal distribution panel data percent permanent component permanent earnings component Population Program positive assortative mating PSID RAND regression sample Schoeni shared component shared parent sibling links siblings share Solon sons and daughters spouses of siblings transitory component transitory earnings variance in permanent vector wives of brothers zero Zimmerman 1992