Long-Term Intergenerational Persistence of Human Capital: An Empirical Analysis of Four Generations

Abstract

Most previous studies of intergenerational transmission of human capital are restricted to two generations -parents and their children. In this study we use a Swedish data set which enables us link individual measures of lifetime earnings for three generations and data on educational attainments of four generations. We investigate to what extent estimates based on income data from two generations accurately predict earnings persistence beyond two generations. We also do a similar analysis for intergenerational persistence in educational attainments. We find two-generation studies to severely under-predict intergenerational persistence in earnings and educational attainment over three and four generations.

The Lasting Impact of Grandfathers: Class, Occupational Status, and Earnings over Three Generations in Sweden 1815–2011

“…As a result, the population that is being examined for this part of the analysis is smaller, amounting to 2233 three-generation lines. Using all observations for individuals on their annual earnings in the ages 30-50, we calculate life time earnings following the approach by Lindahl et al (2012). We regress the individual's earnings in year t on year of birth, its square and cubic, as well as on a set of observation year dummies, following equation (1).…”

“…More recently, it has become increasingly common to examine to what extent the transmission of status carries over from grandparents to grandchildren, which would imply that a three-generation (or even deeper) perspective is necessary (e.g, Warren and Hauser 1997; see also the discussion in Mare 2011 andJäntti 2012). Moreover a two-generation perspective would likely underestimate the strength of social reproduction, or social class persistence across generations (see Lindahl et al 2012) Similar to two-generation studies of socioeconomic mobility, existing three-generation studies have failed to produce coherent results. While some studies point to an important grandparental influence, other studies find no effect of grandparents' status on that of their grandchildren, once the characteristics of the parents are controlled for (see, e.g., the review in Warren and Hauser 1997).…”

“…While some studies point to an important grandparental influence, other studies find no effect of grandparents' status on that of their grandchildren, once the characteristics of the parents are controlled for (see, e.g., the review in Warren and Hauser 1997). Some studies looking at income persistence across generations have found a significant influence from grandparents to grandchildren, net of parental impact, which suggests a direct influence (e.g., Lindahl et al 2012). Despite the emergence of several stratification and mobility studies going beyond a two-generation approach, there is still need for more knowledge about long-term aspects of socioeconomic attainment and mobility (Mare 2011).…”

“…In a study of earnings mobility across three generations using data of a cohort of school children from 1938 in Malmö in southern Sweden, Lindahl et al (2012) find a significant association between the earnings of grandparents and grandchildren, net of the impact of parental earnings. In other words, there is a clear grandparental influence on earnings that is not working through the earnings of the parental generation.…”

“…It is probably to be expected that this kind of direct influence through wealth and high-status networks should be most strongly felt at the upper end of the status distribution, and thus that it could be a major explanation for a high degree socioeconomic persistence in the upper classes (see, e.g., Zimmerman 1992;Lindahl et al 2012). These kinds of transfers do not depend on close interaction between the generations through coresidence or geographic proximity.…”