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Title: An Intergenerational Model of Earnings, Hours and Wages
Resulting in 1 citation.
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Altonji, Joseph G. Dunn, Thomas Albert |
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An Intergenerational Model of Earnings, Hours and Wages Working Paper, Center for Urban Affairs and Policy Research, Northwestern University, 1990 Cohort(s): Mature Women, Older Men, Young Men, Young Women Publisher: Center for Urban Affairs and Policy Research, Northwestern University, now Institute for Policy Research Keyword(s): Earnings; Family Influences; Fathers; Intergenerational Patterns/Transmission; Labor Market Outcomes; Mothers; Pairs (also see Siblings); Parental Influences; Sons; Wages Permission to reprint the abstract has not been received from the publisher. In this paper, the authors measure the extent to which the parental and family characteristics that drive wage rates and work hours independently of wage rates are responsible for similarities among family members in labor market outcomes. A factor model is developed for the earnings, hours and wages of young men and young women which then dictates the linkages among the covariances of these variables and those of their parents and their siblings. In the model, a young man's or woman's wage depends on the permanent component of father's wage, the permanent component of mother's wage, a sibling component which captures background characteristics that are common to siblings and are independent of the parents, and an idiosyncratic component. The young man's annual hours depend on his wages and his preferences which are composed of four independent elements--his father's preference factor, his mother's preference factor, and sibling and idiosyncratic factors. Lastly, his earnings are determined by his wages and his hours choice. The authors fit the model using auto- and covariances of earnings, hours and wages estimated from data on matched sibling and parent-child pairs from the NLS. The results indicate that the wages of young men and young women are quite responsive to the wage components of their fathers and mothers, and that there are important family links among the labor supply preferences as well. It was also found that wages play a small role in labor supply determination for young men, young women, and older men, and a larger role for mature women. Detailed decompositions of the variance of earnings, hours, and wages are provided. |
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Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "An Intergenerational Model of Earnings, Hours and Wages." Working Paper, Center for Urban Affairs and Policy Research, Northwestern University, 1990. |