RT Journal Article
SR Electronic
T1 Biases in Standard Measures of Intergenerational Income Dependence
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 0715-7290R
DO 10.3368/jhr.52.3.0715-7290R
A1 Martin Nybom
A1 Jan Stuhler
YR 2016
UL http://jhr.uwpress.org/content/early/2016/12/05/jhr.52.3.0715-7290R.abstract
AB Estimates of the most common mobility measure, the intergenerational elasticity, can be severely biased if snapshots are used to approximate lifetime income. However, little is known about biases in other popular dependence measures. Using long Swedish income series, we provide such evidence for log-linear and rank correlations, and rank-based transition probabilities. Attenuation bias is considerably weaker in rank-based measures. Life-cycle bias is strongest in the elasticity; moderate in log-linear correlations; and small in rank-based measures. However, with important exceptions: persistence in the tails of the distribution is considerably higher, and long-distance downward mobility lower, than estimates from short-run income suggest.