Working Paper
Explaining Intergenerational Mobility: The Role of Fertility and Family Transfers
Abstract: Poor families have more children and transfer less resources to them. This suggests that family decisions about fertility and transfers dampen intergenerational mobility. To evaluate the quantitative importance of this mechanism, we extend the standard heterogeneous agent life cycle model with earnings risk and credit constraints to allow for endogenous fertility, family transfers, and education. The model, estimated to the US in the 2000s, implies that a counterfactual flat income-fertility profile would-through the equalization of initial conditions-increase intergenerational mobility by 6%. The impact of a counterfactual constant transfer per child is twice as large.
Keywords: Inequality; Intergenerational mobility; Fertility;
JEL Classification: D91; J13; J24; J62;
https://doi.org/10.20955/wp.2018.011
Status: Published in Review of Economic Dynamics
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https://doi.org/10.20955/wp.2018.011
Description: https://doi.org/10.20955/wp.2018.011
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Bibliographic Information
Provider: Federal Reserve Bank of St. Louis
Part of Series: Working Papers
Publication Date: 2016-11-16
Number: 2018-011