RT Journal Article
SR Electronic
T1 Heterogeneous Income Profiles and Lifecycle Bias in Intergenerational Mobility Estimation
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 239
OP 268
DO 10.3368/jhr.51.1.239
VO 51
IS 1
A1 Martin Nybom
A1 Jan Stuhler
YR 2016
UL http://jhr.uwpress.org/content/51/1/239.abstract
AB 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.