RT Journal Article
SR Electronic
T1 Spillover Bias in Multigenerational Income Regressions
JF Journal of Human Resources
FD University of Wisconsin Press
SP 743
OP 776
DO 10.3368/jhr.0520-10919R2
VO 59
IS 3
A1 Modalsli, Jørgen
A1 Vosters, Kelly
YR 2024
UL http://jhr.uwpress.org/content/59/3/743.abstract
AB A growing literature studies long-term income persistence across more than two generations. Despite a rich understanding of measurement-related biases for the parent–child 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 coefficient. Importantly, for a given parental measure, averaging over more years for grandparents increases spillover bias. We propose an instrumental variables (IV) approach that can more effectively mitigate bias with shorter time spans of income. With Norwegian administrative data, we reveal a positive spillover bias in the grandfather coefficients.