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INTERGENERATIONAL MOBILITY IN EDUCATION AND OCCUPATION

Published online by Cambridge University Press:  17 May 2018

Jaime Alonso-Carrera ,
Jordi Caballé  and
Xavier Raurich
Jaime Alonso-Carrera
Affiliation:
Universidade de Vigo
Jordi Caballé*
Affiliation:
Universitat Autònoma de Barcelona and Barcelona GSE
Xavier Raurich
Affiliation:
Universitat de Barcelona
*
Address correspondence to: Jordi Caballé, Universitat Autònoma de Barcelona, Departament d'Economia i d'Història Econòmica, Edifici B., 08193Bellaterra, Barcelona, Spain; e-mail: [email protected].
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Abstract

We build a model that, according to the empirical evidence, gives rise to oscillations in wealth within a dynasty while keeping intergenerational persistence in education attainment. We propose a mechanism based on the interaction between wealth and effort as suggested by the Carnegie conjecture, according to which wealthier individuals devote less effort in their job occupations than poorer. Oscillations in wealth arise from changes in the occupation chosen by different generations of the same dynasty as a response to both inherited wealth and college premium. Our mechanism generates a rich social stratification with several classes in the long run due to the combination of different levels of education and occupation types. Furthermore, we generate a large mobility in wealth among classes even in the long run. Our model highlights the role played by the minimum cost on education investment, the borrowing constraints, and the complementarity between education and occupational effort.

Keywords

Intergenerational MobilityEducationOccupation
Type
Articles
Information
Macroeconomic Dynamics , Volume 24 , Issue 2 , March 2020 , pp. 291 - 326
Copyright
© Cambridge University Press 2018

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Footnotes

Financial support from the Government of Spain/FEDER through Grants ECO2015-66701, ECO2015-67602, and ECO2015-68367; the RecerCaixa program, the French National Research Agency through A*MIDEX project ANR-11-IDEX-0001-02; the Severo Ochoa Program through Grant SEV-2015-0563; and the Generalitat of Catalonia through Grant 2017-SGR-1765 is gratefully acknowledged. This paper has benefited from comments by participants in the Summer Forum of the Barcelona GSE, ASSET meeting, AMSE workshop in Growth and Development, Navarre-Basque Country Macroeconomics workshop, Madrid Mobility workshop, Regional Science Association meeting, and the Symposium of the Spanish Economic Association.

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