Estimating Intergenerational Persistence of Lifetime Earnings with Life Course Matching: Evidence from PSID.

Why do estimates of the intergenerational persistence in earnings vary so much for the United States? Recent research suggests that life-cycle bias may be a major factor (Haider and Solon 2006; Grawe 2006). In this paper we estimate the intergenerational correlation in lifetime earnings by using sons' and fathers' earnings at similar ages in order to account for lifecycle bias. Our estimate based on earnings measured at 35-44 for both fathers and sons is similar to that for the age range 45-54.