The effects of measurement error and omitted variables when using transition matrices to measure intergenerational mobility


Sweetman, Olive (2007) The effects of measurement error and omitted variables when using transition matrices to measure intergenerational mobility. Journal of Economic Inequality, 5 (2). pp. 159-178. ISSN 1569-1721

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Abstract

This paper examines the consequences of specification error when transition matrices are used to analyse patterns of intergenerational mobility. We show that classical measurement error in both the child’s and parent’s earnings can lead to biased results, with summary mobility measures biased by as much as 20% in some cases. Furthermore our results suggest that the extent of the bias is most severe in the tails of the distribution. Omitted conditioning variables appear to have a modest effect on transition matrices in our model.

Item Type: Article
Keywords: Transition matrices; Specification error; Intergenerational mobility;
Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
Item ID: 8524
Identification Number: 0.1007/s10888-006-9035-7
Depositing User: Olive Sweetman
Date Deposited: 26 Jul 2017 14:08
Journal or Publication Title: Journal of Economic Inequality
Publisher: Springer Verlag
Refereed: Yes
URI:

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