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Title: The Black-White Income Mobility Gap and Investment in Children's Human Capital

Citation Type: Miscellaneous

Publication Year: 2009

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Abstract: At every percentile of the last generation's earnings distribution black sons experience a lowerprobability of upward mobility with respect to their fathers position than their white counter-parts. Furthermore, the intergenerational elasticity of earnings is signi ficantly lower for blacksthan it is for whites. To analyze the intergenerational earnings transmission process this papergoes beyond a comparison of aggregated measures of parental income with their children's statusby building a dynamic model of parental investments in children's human capital. The paperthereby incorporates recent fi ndings in the literature on children's skill formation. In additionto mean earnings, earnings shocks and parental separation negatively a ffect the accumulationof children's human capital during the parental life cycle. The model also permits diff erences inpreferences and in the technology of human capital production and it allows for the possibilityof statistical discrimination. To assess the relative contributions of all these factors in explain-ing the observed di fferences in earnings mobility the model is estimated using data from thePanel Study of Income Dynamics which includes observations on parental life cycles as well aschildren's adult outcomes. Results show that the variation of parental income during childhood,caused by the instability of families and transitory income shocks is able to explain about halfof the observed mobility gap. Furthermore, equalizing all disparities in parental backgroundreverses the gap in upward earnings mobility.

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Authors: Schwenkenberg, Julia M.

Publisher: Rutgers University

Data Collections: IPUMS USA

Topics: Education, Labor Force and Occupational Structure, Race and Ethnicity

Countries: United States