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Research ArticleArticles

Spillover bias in multigenerational income regressions

Jørgen Modalsli and Kelly Vosters
Published online before print February 04, 2022, 0520-10919R2; DOI: https://doi.org/10.3368/jhr.0520-10919R2
Jørgen Modalsli
Jørgen Modalsli is at Oslo Business School at Oslo Metropolitan University and Statistics Norway.
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Kelly Vosters
Kelly Vosters is at the University of North Carolina - Charlotte. Email: .
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Abstract

A growing literature studies long-term income persistence across more than two generations. Despite a rich understanding of measurement-related biases for the parentchild model, far less is known for the multigenerational model that captures transmission from parents and grandparents. We show that even using a 25-year income average can result in a spurious grandparent coefficients. Importantly, for a given parental measure, averaging over more years for grandparents increases spillover bias. We propose an IV approach that can more effectively mitigate bias with shorter timespans of income. With Norwegian administrative data, we reveal a positive spillover bias in the grandfather coefficients.

Keywords:
  • Multigenerational mobility
  • income mobility
  • measurement error
  • spillover bias
JEL Classification Codes:
  • J62
  • C30

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Journal of Human Resources: 58 (3)
Journal of Human Resources
Vol. 58, Issue 3
1 May 2023
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Spillover bias in multigenerational income regressions
Jørgen Modalsli, Kelly Vosters
Journal of Human Resources Feb 2022, 0520-10919R2; DOI: 10.3368/jhr.0520-10919R2

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Spillover bias in multigenerational income regressions
Jørgen Modalsli, Kelly Vosters
Journal of Human Resources Feb 2022, 0520-10919R2; DOI: 10.3368/jhr.0520-10919R2
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Keywords

  • Multigenerational mobility
  • income mobility
  • measurement error
  • spillover bias
  • J62
  • C30
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