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Title: Skill-biased Technical Change and Intergenerational Education Mobility
Citation Type: Miscellaneous
Publication Year: 2022
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Abstract: This paper analyzes the impact of skill-biased technological change (SBTC) on intergenerational education mobility. I set up an SBTC model with an overlapping generations framework, where heterogeneously-skilled households invest in their children’s education to make them skilled. Technology incentivizes these investments by creating both pecuniary (higher skill-premium) and non-pecuniary (improved life skills) benefits; it constrains investments among low-income households by increasing inequality. I show there is a critical technology range within which SBTC shocks can increase investments by both high-income and low-income households, improving absolute education mobility. Moreover, the relative increase in transfers can be larger for the low-income group who initially have lower investment levels, which can help their children catch-up. I test the predictions of the model using data from Chetty et al. (2014) which show how college attendance rates of children in U.S. commuting zones (CZs) are linked to the rank of their families in the national income distribution. A technology measure is constructed for each CZ using its share of STEM workers, which I instrument using a Bartik-type IV to deal with endogeneity concerns. From 2SLS estimations, I find that college attendance rates of children from households in the same income rank improve if households are located in higher technology CZs, with the improvement being larger among lower-ranked households. Thus, SBTC is found to improve both absolute and relative intergenerational education mobility.
Url: https://assets.researchsquare.com/files/rs-2219954/v1/8fc2dfae563fa99ae09bb282.pdf?c=1669663742
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Authors: Aziz, Imran
Publisher: Yorkville University
Data Collections: IPUMS USA
Topics: Education, Poverty and Welfare
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