Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Economic Interpretations of Intergenerational Correlations
Journal of Economic Perspectives
vol. 16,
no. 3, Summer 2002
(pp. 45–58)
(Complimentary)
Abstract
Since accurate prediction ultimately determines the usefulness of theory, our paper gives the reader a taste of some predictions derived from economic theory and some empirical successes and failures. We provide only a taste, because there are a great many economic models relevant to intergenerational correlations — such as models of educational attainment, neighborhood effects in schooling, family formation and fertility choice, occupational choice and discrimination — and quite a variety of predictions that might be derived from these models. However, a simple model of investment and intergenerational decision making can be interpreted as a conceptual aggregation of many more detailed economic models. We present such a model and from it derive one class of predictions that has received substantial attention in the empirical literature — the role of endowments and credit markets in determining intergenerational correlations.Citation
Grawe, Nathan, D., and Casey B. Mulligan. 2002. "Economic Interpretations of Intergenerational Correlations." Journal of Economic Perspectives 16 (3): 45–58. DOI: 10.1257/089533002760278703JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- J62 Job, Occupational, and Intergenerational Mobility; Promotion
- D91 Intertemporal Household Choice; Life Cycle Models and Saving