The Impact of Life-Cycle Bias on Intergenerational Income Mobility: Estimates for the US and Germany applying a Covariance Structure Model
نویسنده
چکیده
In this study we suggest a covariance structure model to estimate intergenerational income correlations. Within this framework we adjust for lifecycle bias which arises when lifetime earnings are approximated by current income. Furthermore, the suggested empirical strategy is immune to the attenuation bias problem of linear models. This is a particularly desirable feature when only small survey data sets are available. Our estimates for the US of about 0.45 are at the high end of what is reported in the literature. The German estimate of 0.25 is similar in magnitude to the scarce evidence for this country. JEL-Classification: J62, C51.
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