Hostname: page-component-78c5997874-94fs2 Total loading time: 0 Render date: 2024-11-05T22:40:04.472Z Has data issue: false hasContentIssue false
  • English
  • Français

INTERGENERATIONAL MOBILITY AND SOCIAL STATUS IN A MODEL WITH HUMAN CAPITAL INVESTMENTS AND TRAIT INHERITANCE

Published online by Cambridge University Press:  16 December 2019

Rainer Andergassen  and
Franco Nardini
Rainer Andergassen
Affiliation:
University of Bologna
Franco Nardini*
Affiliation:
University of Bologna
*
Address correspondence to: Franco Nardini, Department of Mathematics, University of Bologna, Piazza di Porta San Donato 5, 40126 Bologna, Italy. Phone: +39 (051) 209 4341. Fax: +39 (051) 209 4367. e-mail: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

We study a model in which parents care about the economic and social status of their offspring. The chances of an individual achieving social status depends on innate traits, that is, IQ, ability, social and cultural environment, and other price-insensitive endowments, passed on by their parents, on human capital investments and on chance events. Parents can, through human capital investments, increase the offspring’s probability of climbing the social ladder, although they cannot borrow against the children’s perspective earning. Consequently, income and trait heterogeneity are the determinants of unequal opportunities and of intergenerational mobility.

Keywords

Intergenerational MobilityStatus CompetitionInequalityHuman CapitalInnate Traits
Type
Articles
Information
Macroeconomic Dynamics , Volume 25 , Issue 3 , April 2021 , pp. 776 - 794
Copyright
© Cambridge University Press 2019

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

The authors would like to thank three anonymous referees and all the participants of NED 2017 for their comments and remarks.

References

REFERENCES

Aghion, P. and Bolton, P. (1997) A theory of Trickle-Down growth and development. Review of Economic Studies 64, 151–172.CrossRefGoogle Scholar
Banerjee, A. V. and Newman, A. F. (1993) Occupational choice and the process of development. Journal of Political Economy 101, 274–298.CrossRefGoogle Scholar
Becker, G. S. and Tomes, N. (1979) An equilibrium theory of the distribution of income and intergenerational mobility. Journal of Political Economy 87, 1153–1189.CrossRefGoogle Scholar
Becker, G. S. and Tomes, N. (1986) Human capital and the rise and fall of families. Journal of Labour Economics 4, S1–S39.CrossRefGoogle ScholarPubMed
Bisin, A. and Verdier, T. (2001) The economics of cultural transmission and the dynamics of preferences. Journal of Economic Theory 97, 298–319.CrossRefGoogle Scholar
Bowles, S. and Gintis, H. (2002) The inheritance of inequality. Journal of Economic Perspectives 16, 3–30.CrossRefGoogle Scholar
Chakraborty, D., Thompson, J. C. and Yehoue, E. B. (2016) The culture of entrepreneurship. Journal of Economic Theory 163, 288–317.CrossRefGoogle Scholar
Checchi, D., Ichino, A. and Rustichini, A. (1999) More equal but less mobile? Education financing and intergenerational mobility in Italy and in the US. Journal of Public Economics 74, 351–393.CrossRefGoogle Scholar
Corak, M. (2013) Income inequality, equality of opportunity, and intergenerational mobility. Journal of Economic Perspectives 27, 79–102.CrossRefGoogle Scholar
Couch, K. A. and Morand, O. F. (2005) Inequality, mobility, and the transmission of ability. Journal of Macroeconomics 27, 365–377.CrossRefGoogle Scholar
Doepke, M. and Zilibotti, F. (2008) Occupational choice and the spirit of capitalism. Quarterly Journal of Economics 123, 747–93.CrossRefGoogle Scholar
Doepke, M. and Zilibotti (2014) Culture, entrepreneurship and growth. In: Handbook of Economic Growth, vol. 2. Philippe Aghion and Steven N. Durlauf (eds.), Chapter 1, pp. 1–48.CrossRefGoogle Scholar
Durlauf, S. N., Kourtellos, A. and Tan, C. M. (2017) Status traps. Journal of Business and Economic Statistics 35, 265–287.CrossRefGoogle Scholar
Fershtman, C., Murphy, K. M. and Weiss, Y. (1996) Social status, education, and growth. Journal of Political Economy 104, 108–132.CrossRefGoogle Scholar
Galor, O. and Tsiddon, D. (1997) Technological progress, mobility, and economic growth. American Economic Review 87, 363–382.Google Scholar
Galor, O. and Zeira, J. (1993) Income distribution and macroeconomics. Review of Economic Studies 60, 35–52.CrossRefGoogle Scholar
Ghatak, M. (2015) Theories of poverty traps and anti-poverty policies. World Bank Economic Review 29, S77–S105.CrossRefGoogle Scholar
Heckman, J. J. and Mosso, S. (2014) The economics of human development and social mobility. Annual Review of Economics 6, 689–733.CrossRefGoogle ScholarPubMed
Hassler, J. and Rodríguez Mora, J. V. (2000) Intelligence, social mobility, and growth. American Economic Review 90, 888–908.CrossRefGoogle Scholar
Lee, S. Y. and Seshadri, A. (2019) On the Intergenerational Transmission of Economic Status. Journal of Political Economy 127, 855–921.CrossRefGoogle ScholarPubMed
Maoz, Y. D. and Moav, O. (1999) Intergenerational mobility and the process of development. The Economic Journal 109, 677–697.CrossRefGoogle Scholar
Matsuyama, K. (2000) Endogenous inequality. Review of Economic Studies 67, 743–759.CrossRefGoogle Scholar
Matsuyama, K. (2011) Imperfect Credit Markets, Household Wealth Distribution, and Development. Annual Review of Economics 3, 339–362.CrossRefGoogle Scholar
Mookherjee, D. and Ray, D. (2003) Persistent inequality. Review of Economic Studies 70, 369–393.CrossRefGoogle Scholar
Owen, A. L. and Weil, D. N. (1998) Intergenerational earnings mobility, inequality, and growth. Journal of Monetary Economics 41, 71–104.CrossRefGoogle Scholar
Piketty, T. (1997) The dynamics of the wealth distribution and the interest rate with credit rationing. Review of Economic Studies 64, 173–189.CrossRefGoogle Scholar
Plug, E. and Vijverberg, W. (2003) Schooling, family background, and adoption: Is it nature or is it nurture? Journal of Political Economy 111, 611–41.CrossRefGoogle Scholar
Retuccia, D. and Urrutia, C. (2004) Intergenerational persistence of earnings: The role of early and college education. American Economic Review 94, 1354–1378.CrossRefGoogle Scholar
Roemer, J. E. (2004) Equal opportunity and intergenerational mobility: going beyond intergenerational income transition matrices. In: M. Corak (ed.), Generational Income Mobility in North America and Europe, Chapter 3. Cambridge University Press.CrossRefGoogle Scholar
Sacerdote, B. J. (2002) The nature and nurture of economic outcomes. American Economic Review (Papers and Proceedings) 92, 344–48.CrossRefGoogle Scholar
Solon, G. (1992) Intergenerational income mobility in the United States. American Economic Review 82, 393–408.Google Scholar
Solon, G. (2002) Cross-country differences in intergenerational earnings mobility. Journal of Economic Perspectives 16, 59–66.CrossRefGoogle Scholar
Solon, G. (2004) A model of intergenerational mobility variation over time and place. In: Corak, Miles (ed.), Generational Income Mobility in North America and Europe, pp. 38–47. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Varvarigos, D. (2017) Economic Growth and the Cultural Transmission of Attitudes Towards Education. University of Leicester working paper no. 17/06.Google Scholar
Zimmerman, D. (1992) Regression toward mediocrity in economic stature. American Economic Review 82, 409–429.Google Scholar