Living in your parents' shadow: intergenerational earnings aspirations

This is an event in the Economics Research Seminar series taking place at Leeds University Business School on 31 October 2018

All welcome! Refreshments provided. 


In this paper I estimate elasticities of children’s earnings with respect to parental earnings across the distribution for the first time on English data, shedding light on social mobility beyond simple estimates of aggregate earnings persistence. Using quantile regression with linear splines I show that the elasticities vary systematically across the distribution, with the estimated elasticities higher (lower) for the children whose income is low (high) relative to their parents’. This method also offers a way to distinguish between plausible mechanisms through which earnings are transmitted such as credit constraints, childhood investments and behavioural factors. I explain the results as parents’ earnings acting as an aspiration for their children, which creates a ‘kink’ where those below the kink have a higher response to their parents’ earnings.