Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324407 
Year of Publication: 
2024
Series/Report no.: 
IFS Working Papers No. 24/25
Publisher: 
The Institute for Fiscal Studies (IFS), London
Abstract: 
How do education, skills, investments of parental time and school quality, and family circumstances during childhood contribute to the persistence of earnings across generations? Building on a classic literature in sociology and a more recent literature in economics, our model allows each of the above variables to affect lifetime earnings directly, as well as through their contribution to human capital formation. The model allows us to decompose the intergenerational elasticity of earnings (IGE) into its drivers. Using data from a representative British cohort followed from birth to age 55, we show the above variables explain most of the IGE. A key driver is the increased levels of parental investments received by children of high income parents early in their lives, and the resulting cognitive development.
Subjects: 
Parental Investments
Cognitive Skills
Intergenerational Elasticity of Earnings
JEL: 
I24
J24
C38
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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