Full Citation
Title: Business Cycles and American Dreams: (DIS) Aggregate Fluctuations and Intergenerational Mobility
Citation Type: Dissertation/Thesis
Publication Year: 2020
ISBN:
ISSN:
DOI:
NSFID:
PMCID:
PMID:
Abstract: In this thesis, I test my central hypothesis that aggregate economic fluctuations (business cycles) affect intergenerational economic mobility (American dreams). I exploit heterogeneity across U.S. state-level business cycles. I argue that these cycles impose countercyclical credit constraints on households that rely on credit to invest in the human capital of their children. Thus, credit constraints effectively limit the skills and expected earnings of children. I focus on an empirical measure of absolute mobility that Chetty et al. (2017) propose: the rate of absolute income mobility, which measures the fraction of adult children who earn more than their parents earned, conditional on the parent’s income rank in their income distribution. My dataset includes state-level rates of absolute income mobility for children in the birth cohorts 1950, 1960, 1970, and 1980. My panel regressions pair state-level estimates of the rate of absolute income mobility for a particular birth cohort—the dependent variable—with statelevel measures of the business cycle during the decade following the cohort year, when the child is heavily dependent on their parent. I find that average cyclical fluctuations in the economy in which children lived between the ages of 0 and 18 drive to some extent their average rate of absolute income mobility through adulthood. This relationship is statistically significant conditional on middle to relatively high percentile ranks of parent income. This may imply that middle- to high-income households rely on credit to finance investment in human capital to an extent that relatively low-income households do not.
Url: https://openprairie.sdstate.edu/cgi/viewcontent.cgi?article=5145&context=etd
User Submitted?: No
Authors: Drescher, Kallie
Institution: South Dakota State University
Department: Economics
Advisor:
Degree:
Publisher Location:
Pages:
Data Collections: IPUMS USA
Topics: Family and Marriage, Housing and Segregation, Population Mobility and Spatial Demography
Countries: