Measurement and Cross-Country Differences

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Unformatted text preview: 11 industry categories and the median log wage of the initial firm in 1978. HuberWhite standard errors are shown from clustering by father ID. Fortin – Econ 560 Lecture 5B This data base is matched with the LEAP data base, a company-level database that includes all employers in Canada, both corporate and unincorporated, to identify firm closure. The authors find an IGE of 0.38 (much closer to the U.S. estimates) and that children whose fathers were displaced have annual earnings about 8-9% lower than similar children whose fathers did not experience an employment shock. Fortin – Econ 560 Lecture 5B 5. Cross-Country and Within-Country Studies Cross-country studies (Corak and Heisz (1999), Jantti and Osterbacka (1996), Osterberg (2000) and Osterbacka (2001) strongly suggest that Canada, Sweden, and ˆ Finland) are more mobile societies than is the United States with around 0.25. In contrast, Atkinson, Maynard and Trinder (1983) and Dearden, Machin and Reed(1997) report higher elasticities (0.42 and 0.57) for the United Kingdom. One must bear in mind that whether the intergenerational correlation is 0.2 or 0.5 has enormous consequences for actual mobility rates. Source: Corak (2007) A son whose father’s status is in the Fortin – Econ 560 Lecture 5B fifth percentile has a 37% chance to rise above the median in the intergenerational correlation is 0.2 and a 17% chance to rise above the median if it is 0.5. In the United States almost one half of children born to low income parents become low income adults. This fraction is also high in the United Kingdom at four in ten, and Canada where about one-third of low income children do not escape low income in adulthood. In Fortin – Econ 560 Lecture 5B the Nordic countries, where overall child poverty rates are noticeably lower, it is also the case that a disproportionate fraction of low income children become low income adults. A pertinent question is whether cross-country differences in intergenerational mobility are connected with other cross-country differences in income inequality, such as lower cross-sectional inequality, remembering that in the equation (1): 1 / 0 . This does work in the comparison of...
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