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

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O’Neill, Donal [National University of Ireland] Sweetman, Olive [] Van de gaer, Dirk [UCL]

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.

Document type Article de périodique (Journal article)
Publication date 2007
Language Anglais
Journal information "Journal of Economic Inequality" - Vol. 5, no. 2, p. 159-178 (Août 2007)
Peer reviewed yes
Publisher Springer New York LLC (New York, USA)
issn 1569-1721
e-issn 1573-8701
Publication status Publié
Affiliations National University of Ireland - Department of Economics
Ghent University - SHERPPA
UCL - EUEN/CORE - Center for operations research and econometrics
Keywords Transition matrices ; Specification error ; Intergenerational mobility
Links
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Bibliographic reference O’Neill, Donal ; Sweetman, Olive ; Van de gaer, Dirk. The effects of measurement error and omitted variables when using transition matrices to measure intergenerational mobility. In: Journal of Economic Inequality, Vol. 5, no. 2, p. 159-178 (Août 2007)
Permanent URL http://hdl.handle.net/2078.1/23747