Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217126 
Year of Publication: 
2018
Citation: 
[Journal:] Quantitative Economics [ISSN:] 1759-7331 [Volume:] 9 [Issue:] 3 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2018 [Pages:] 1195-1241
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
This paper explores the estimation of a class of life-cycle discrete choice dynastic models. It provides a new representation of the value function for these class of models. It compare a multistage conditional choice probability (CCP) estimator based on the new value function representation with a modified version of the full solution maximum likelihood estimator (MLE) in a Monte Carlo study. The modified CCP estimator performs comparably to the MLE in a finite sample but greatly reduces the computational cost. Using the proposed estimator, we estimate a dynastic model and use the estimated model to conduct counterfactual simulations to investigate the role Nature versus Nurture in intergenerational mobility. We find that Nature accounts for 20 percent of the observed intergenerational immobility at the bottom of income distribution. That means that 80 percent of mobility at the bottom of the income distribution is explained by economic decision and economic/institutional constraints.
Subjects: 
Discrete choice models
dynastic models
intergenerational mobility
nature versus nurture
JEL: 
C13
J13
J22
J62
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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