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Research ArticleArticles

Heterogeneous Income Profiles and Lifecycle Bias in Intergenerational Mobility Estimation

Martin Nybom and Jan Stuhler
Journal of Human Resources, January 2016, 51 (1) 239-268; DOI: https://doi.org/10.3368/jhr.51.1.239
Martin Nybom
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Jan Stuhler
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Abstract

Using short snapshots of income in intergenerational mobility estimation causes “lifecycle bias” if the snapshots cannot mimic lifetime outcomes. We use uniquely long series of Swedish income data to show that this bias is large and to examine current strategies to reduce it. We confirm that lifecycle bias is smallest when incomes are measured around midlife, a central implication from a widely adopted generalization of the classical errors-in-variables model. However, the model cannot predict the ideal age of measurement or eliminate lifecycle bias at other ages. We illustrate how extensions of this model can reduce the bias further.

  • Received March 2014.
  • Accepted August 2014.
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Journal of Human Resources: 51 (1)
Journal of Human Resources
Vol. 51, Issue 1
1 Jan 2016
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Heterogeneous Income Profiles and Lifecycle Bias in Intergenerational Mobility Estimation
Martin Nybom, Jan Stuhler
Journal of Human Resources Jan 2016, 51 (1) 239-268; DOI: 10.3368/jhr.51.1.239

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Heterogeneous Income Profiles and Lifecycle Bias in Intergenerational Mobility Estimation
Martin Nybom, Jan Stuhler
Journal of Human Resources Jan 2016, 51 (1) 239-268; DOI: 10.3368/jhr.51.1.239
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  • Article
    • Abstract
    • I. Introduction
    • II. The Intergenerational Mobility Literature
    • III. Measuring Income at a Certain Age
    • IV. Empirical Evidence on Lifecycle Bias
    • V. Extensions
    • VI. Conclusions
    • Footnotes
    • References
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