April 2012

IZA DP No. 6463: The Intergenerational Persistence of Human Capital: An Empirical Analysis of Four Generations

split into two papers and published as 'A test of the Becker-Tomes model of human capital transmission using microdata on four generation' in: Journal of Human Capital, 2014, 7(1), 80-96 and as 'Long-term intergenerational persistence of human capital: an empirical analysis of four generations' in: Journal of Human Resources, 2015, 50(1), 1-33.

Most previous studies of intergenerational transmission of human capital are restricted to two generations – parents and their children. In this study we use a Swedish data set which enables us link individual measures of lifetime earnings for three generations and data on educational attainments of four generations. We investigate to what extent estimates based on income data from two generations accurately predicts earnings persistence beyond two generations. We also do a similar analysis for intergenerational persistence in educational attainments. We find two-generation studies to severely under-predict intergenerational persistence in earnings and educational attainment over three generations. Finally, we use our multigenerational data on educational attainment to estimate the structural parameters in the Becker-Tomes model. Our results suggest a small or no causal effect of parental education on children's educational attainment.