A note on intergenerational risk sharing and the design of pay-as-you-go pension programs

Different versions of pay-as-you-go public pension programs may have entirely different effects on the intergenerational distribution of income risk. If the pension benefit is a fixed proportion of previous labor income, a pay-as-you-go program increases the net income risk of all generations. On the other hand, a pay-as-you-go program characterized by a fixed labor income tax rate and uncertain pension benefits provides intergenerational risk sharing. Received: 10 December 1996 / Accepted: 24 November 1997     

Intergenerational Profiles of Socioeconomic (Dis)advantage and Obesity During the Transition to Adulthood

Investigations of socioeconomic status (SES) and health during the transition to adulthood in the United States are complicated by the later and more varied transitions in residence, employment, schooling, and social roles compared with previous generations. Parental SES is an important influence during adolescence but cannot sufficiently capture the SES of the independent young adult. Typical, single SES indicators based on income or education likely misclassify the SES of young adults who have not yet completed their education or other training, or who have entered the labor force early with ultimately lower status attainment. We use a latent class analysis (LCA) framework to characterize five intergenerational SES groups, combining multidimensional SES information from two time points—that is, adolescent (parental) and young adult (self) SES data. Associations of these groups with obesity, a high-risk health outcome in young adults, revealed nuanced relationships not seen using traditional intergenerational SES measures. In males, for example, a middle-class upbringing in adolescence and continued material advantage into adulthood was associated with nearly as high obesity as a working poor upbringing and early, detrimental transitions. This intergenerational typology of early SES exposure facilitates understanding of SES and health during young adulthood.     

基于多重计量偏误的农村代际收入流动分位回归研究

文章利用中国健康与营养调查数据中的农村家庭数据,在综合考虑暂时性收入偏误、生命周期偏误、同住选择和工作选择偏误后运用分位回归对中国农村家庭的代际收入弹性进行估计。实证结果表明,在收入分布的两端,由于个体特征的差异导致农村家庭呈现出较强的代际收入流动性;而在中位数附近则呈现出较低的代际收入流动性。     

Population aging, health care, and growth

This paper constructs a small open two-sector (health care and non-health care) overlapping generations model and investigates how changes in the demand for health care induced by population aging influence the economy’s employment structure and per capita income growth rate. We show that population aging induces a shift in labor from the non-health care sector to the health care sector and lowers the per capita income growth rate. This paper also investigates public policy for child care and demonstrates the existence of an intergenerational conflict between current and future generations concerning public policy on child care.     

Intergenerational income immobility in Finland: contrasting roles for parental earnings and family income

An intergenerational model is developed, nesting heritable earning abilities and credit constraints limiting human capital investments in children. Estimates on a large, Finnish data panel indicate very low transmission from parental earnings, suggesting that the parameter of inherited earning ability is tiny. Family income, particularly during the phase of educating children, is shown to be much more important in shaping children’s lifetime earnings. This influence of parental incomes on children’s earnings rises as the children age because the returns to education rise. Despite Finland’s well-developed welfare state, persistence in economic status across generations is much higher than previously thought.     

Health Endowment at Birth and Variation in Intergenerational Economic Mobility: Evidence From U.S. County Birth Cohorts

New estimates of intergenerational economic mobility reveal substantial variation in the spatial distribution of opportunity in the United States. Efforts to explain this variation in economic mobility have conspicuously omitted health despite it being a key pathway for the transmission of economic position across generations. We begin to fill this gap in the literature by examining the relationship between health endowment at birth and intergenerational economic mobility across county birth cohorts in the United States, drawing on estimates from two population-level data sets. Exploiting variation across counties and over time, we find a negative relationship between the incidence of low-weight births and the level of economic mobility as measured in adulthood for the county birth cohorts in our sample. Our results build on a large and growing literature detailing the role of early childhood health in the transmission of economic status across generations and suggest that the incidence of low-weight births is negatively associated with intergenerational economic mobility.     

Strategic transfers, redistributive fiscal policies, and family bonds: a micro-economic analysis

This paper presents a micro-economic model to analyze intergenerational exchange in which the utility maximizing decisions of “selfish” children on family services, labor market activities, and leisure are determined endogenously. We show that altruistic parents’ financial transfers have a disincentive effect on the labor supply of their children and that the children’s equilibrium income is positively correlated with parental income. Based on the theoretical model, we find that redistributing US$1 from children to their parents increases parental transfers by less than US$1, implying that intergenerational public transfers are Ricardian non-neutral. However, the non-neutral redistributive transfers may enhance intergenerational family bonds because the equilibrium levels of services rendered by children to their parents increase.     

A comparison and latent variable test of two fertile ideas

Perhaps the two most important recent strands in the economics of fertility have been developed by Becker and Easterlin. Both suggest possible biases due to unobserved variables. Becker earlier emphasized changing shadow prices for child quantity and quality and, more recently, intergenerational serially-correlated endowments, all with given preferences. Easterlin has focused on intergenerational serially-correlated preferences. Some demographers have suggested that the Becker and Easterlin approaches are converging and may not be identified from each other.We demonstrate that while the Becker endowment and Easterlin taste models can be expressed in terms of the same variables, it is possible to identify each of the models because of different signs in a latent variable system that uses information from individuals, siblings, and cousins. Estimates of this model are consistent with the Easterlin, but not the Becker formulation. But neither model results in significant income coefficient estimates.The authors thank NIH for research support and Alan Mathios for excellent research assistance. The usual disclaimer applies.     

Do smart parents raise smart children? The intergenerational transmission of cognitive abilities

Complementing prior research on income and educational mobility, we examine the intergenerational transmission of cognitive abilities. We find that individuals’ cognitive skills are positively related to their parents’ abilities, despite controlling for educational attainment and family background. Differentiating between mothers’ and fathers’ IQ transmission, we find different effects on the cognition of sons and daughters. Cognitive skills that are based on past learning are more strongly transmitted between generations than skills that are related to innate abilities. Our findings are not compatible with a pure genetic model but rather point to the importance of parental investments for children’s cognitive outcomes.     

Intergenerational earnings mobility in Japan among sons and daughters: levels and trends

This paper estimates the extent of intergenerational income mobility in Japan among sons and daughters born between 1935 and 1975. Our estimates rely on a two-sample instrumental variables approach using representative data from the Japanese Social Stratification and Mobility surveys, collected between 1965 and 2005. Father’s income is predicted on the basis of a rich set of variables, and we discuss changes in the Japanese earnings structure for cohorts born between the early 1900s and the 1960s. Our main results indicate that the intergenerational income elasticity (IGE) for both sons and daughters in Japan lies around 0.35, which is an intermediate value, by international standards. We discuss the sensitivity of the IGE to using either personal or family income as the income variable for both fathers and children. We also examine changes across cohorts in the IGE. Results indicate that intergenerational mobility has been roughly stable over the last decades.     

The Interplay between Educational Achievement, Occupational Success, and Well-Being

Many studies have examined the effect of life events, education, and income on well-being. Conversely, research concerning well-being as a predictor of life course outcomes is sparse. Diener’s suggestion “to inquire about the effects of well-being on future behavior and success” has, with some exceptions, not yet come to fruition. This article contributes to this body of research. We conceptualize and analyze the interplay between educational achievement, occupational success, and well-being as a complex process. The relationship between these domains is examined drawing on a structure-agency framework derived from Bourdieu and Social Comparison Theory. Social comparison between adolescents and their parents is suggested to be the mechanism explaining the effects of successful and unsuccessful intergenerational transmission of educational achievement and occupational success on well-being. It is further argued that well-being may serve as an individual resource by fostering educational and occupational outcomes. Panel data from the Transition from Education to Employment (TREE) project, a Swiss PISA 2000 follow-up study, was used. The interplay between well-being and successful and unsuccessful intergenerational transfer of educational attainment was analyzed in an autoregressive cross-lagged mixture model framework. Social comparison was found to be related to well-being, while well-being proved to significantly increase the probability of successful intergenerational transfer of educational attainment.     

Immigrant skills and ethnic spillovers

This paper investigates the hypothesis that ethnicity has spillover effects on the human capital accumulation process. It extends previous research by documenting the extent to which the relative importance of parental inputs and ethnic spillovers in the intergenerational transmission of skills differs both within and across immigrant and U.S.-born ethnic groups. Using data drawn from the General Social Surveys, the study documents that the second and third generations (i.e., the children and grandchildren of immigrants) experience relatively more rapid economic advancement than do other generations, and that ethnic spillovers play a stronger role in households which are at the extremes of the skill distribution.Professor of Economics, University of California at San Diego, and Research Associate, National Bureau of Economic Research. This research was supported by grants from the Russell Sage Foundation and the National Science Foundation (Grant no. SES-9121538).     

Pay-as-you-go social security in a changing environment

In this paper, we examine the optimal pay-as-you-go social security scheme which reallocates resources across generations in a changing environment, that is, with fluctuations in population growth rates and in productivity levels. We use an overlapping generations model along with a social welfare function consisting of the sum of generational utilities either unweighted or weighted by population size and a discount factor. We show how intergenerational resource sharing can be used to improve social welfare even though the extent of intergenerational redistribution is hampered by payroll tax deadweight losses in the spirit of the optimal taxation literature. Also it appears that resource sharing is much more restricted in a closed economy that in an open economy, which is not subject to a national resource constraint at each period of time. This paper was presented at the 1990 ISPE-Conference on the Fiscal Implications of an Ageing Population, Vaalsbroek Castle, Netherlands. The authors wish to thank the participants and particularly B. van Praag and W. Peters for their comments. They also thank the two referees and Philippe Michel for very helpful comments and discussions. The financial support of CIM during his sabbatical year is greatly acknowledged by the second author.     

Parental leave policies,intra-household time allocations and children’s human capital

This paper uses a general equilibrium model of marriage and divorce to assess how public policies on parental leave and leave benefits affect intra-household decision making, family structure, intergenerational mobility, and the distribution of income. The benchmark economy is calibrated to US data to replicate some characteristics relevant to the interaction between the marriage and labor markets. The effects of unpaid leave, paid leave benefits, and mandated leave on human capital investment, distribution of income, and welfare are then analyzed.      

Does Public Investment Promote Intergenerational Mobility? Who Really Benefits?

Social Indicators Research - The conventional model of intergenerational income mobility suggests child’s income is a function of his human capital investment determined by parental income,...     

Cognitive skills,non-cognitive skills,and family background: evidence from sibling correlations

This paper estimates sibling correlations in cognitive and non-cognitive skills to evaluate the importance of family background for skill formation. Based on a large representative German dataset including IQ test scores and measures of non-cognitive skills, a restricted maximum likelihood model indicates a strong relationship between family background and skill formation. Sibling correlations in non-cognitive skills range from 0.22 to 0.46; therefore, at least one-fifth of the variance in these skills results from shared sibling-related factors. Sibling correlations in cognitive skills are higher than 0.50; therefore, more than half of the inequality in cognition can be explained by shared family background. Comparing these findings with those in the intergenerational skill transmission literature suggests that intergenerational correlations capture only part of the influence of family on children’s cognitive and non-cognitive skills, as confirmed by decomposition analyses and in line with previous findings on educational and income mobility.     

The intergenerational transmission of fertility in contemporary Denmark: The effects of number of siblings (full and half), birth order,and whether male or female

Using the Danish Fertility Database, we investigate intergenerational fertility transmission, including the relationship between the number of children born to those aged 25 and 26 years in 1994 and the number of their full sibs and half-sibs. We find that the fertility behaviour of parents and their children is positively correlated, and that half-sibs and full sibs have broadly similar effects. We do not find, in this complete national population, the strong birth order effects reported in some earlier studies. Nor do we find evidence of a weakening of intergenerational fertility transmission over time, perhaps because the greater flexibility of lifestyles in this post-transitional phase provides the extended social space within which intergenerational continuities can manifest themselves. We show that members of large families are over-represented in subsequent generations - that they have far more kin than those from smaller families - and that intergenerational continuities in fertility behaviour play a substantial role in keeping fertility higher than it would be in the absence of such transmission.     

The intergenerational transmission of fertility in contemporary Denmark: the effects of number of siblings (full and half), birth order,and whether male or female

Using the Danish Fertility Database, we investigate intergenerational fertility transmission, including the relationship between the number of children born to those aged 25 and 26 years in 1994 and the number of their full sibs and half-sibs. We find that the fertility behaviour of parents and their children is positively correlated, and that half-sibs and full sibs have broadly similar effects. We do not find, in this complete national population, the strong birth order effects reported in some earlier studies. Nor do we find evidence of a weakening of intergenerational fertility transmission over time, perhaps because the greater flexibility of lifestyles in this post-transitional phase provides the extended social space within which intergenerational continuities can manifest themselves. We show that members of large families are over-represented in subsequent generations - that they have far more kin than those from smaller families - and that intergenerational continuities in fertility behaviour play a substantial role in keeping fertility higher than it would be in the absence of such transmission.     

The macroeconomics of fertility in small open economies: A test of the Becker-Barro model for The Netherlands and New Zealand

Becker and Barro (1988) formulated a theoretical model which identified a range of macroeconomic variables which can temporarily or permanently affect fertility in small open economies. This article tests the Becker-Barro model with relevant data which covers most of the 20th century for two small open economies, namely The Netherlands and New Zealand. The results show that government subsidies for having children have a strong positive effect on fertility, while the provision of public pensions has a strong negative effect. The degree of intergenerational altruism appears to have been declining. Moreover, there is only weak support for the hypothesis that real interest rates positively influence fertility. Received: 2 March 1998/Accepted: 1 September 1999