Conference Program Home
  My Program

All Times EDT

Abstract Details

Activity Number: 540 - Statistical Foundation for Studying Economic Mobility and Social Disparities
Type: Invited
Date/Time: Thursday, August 11, 2022 : 10:30 AM to 12:20 PM
Sponsor: Business and Economic Statistics Section
Abstract #320538
Title: Estimating Intergenerational Elasticities with Copula-Based Selection Models and Highly Flexible Income Distributions
Author(s): Pablo A. Mitnik* and Victoria Bryant
Companies: University of Michigan-Ann Arbor and Statistics of Income Division, Internal Revenue Service
Keywords: Intergenerational elasticity; Selection bias; Copula-based selection models; Administrative data; Dagum distribution; GB2 distribution
Abstract:

Estimation of the intergenerational income elasticity (IGE) with the short-run measures of earnings that are usually available is seriously affected by the "zeros problem," that is, the fact that those without earnings (due to unemployment or other forms of nonemployment) cannot be included in the analysis. This can be expected to generate a downward selection bias that should be particularly large when the earnings information comes from administrative records. We address this problem by relying on bivariate copula-based selection models to estimate the IGE of men’s earnings with data from the Statistics of Income Mobility Panel (a dataset built from tax and other administrative data). We estimate a very large number of selection models by maximum likelihood and use information criteria to select the best estimates. The selection models rely on various copulas and marginal distributions, including several distributions never used before in the copula-based selection literature. Our analyses confirm that the standard estimator badly underestimates the IGE, and indicate that, among U.S. men, about two-thirds of family economic advantages are transmitted through the labor market.


Authors who are presenting talks have a * after their name.

Back to the full JSM 2022 program