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INTERGENERATIONAL MOBILITY IN EDUCATION AND OCCUPATION

  • Jaime Alonso-Carrera (a1), Jordi Caballé (a2) and Xavier Raurich (a3)

Abstract

We build a model that, according to the empirical evidence, gives rise to oscillations in wealth within a dynasty while keeping intergenerational persistence in education attainment. We propose a mechanism based on the interaction between wealth and effort as suggested by the Carnegie conjecture, according to which wealthier individuals devote less effort in their job occupations than poorer. Oscillations in wealth arise from changes in the occupation chosen by different generations of the same dynasty as a response to both inherited wealth and college premium. Our mechanism generates a rich social stratification with several classes in the long run due to the combination of different levels of education and occupation types. Furthermore, we generate a large mobility in wealth among classes even in the long run. Our model highlights the role played by the minimum cost on education investment, the borrowing constraints, and the complementarity between education and occupational effort.

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Corresponding author

Address correspondence to: Jordi Caballé, Universitat Autònoma de Barcelona, Departament d'Economia i d'Història Econòmica, Edifici B., 08193 Bellaterra, Barcelona, Spain; e-mail: jordi.caballe@uab.es.

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Financial support from the Government of Spain/FEDER through Grants ECO2015-66701, ECO2015-67602, and ECO2015-68367; the RecerCaixa program, the French National Research Agency through A*MIDEX project ANR-11-IDEX-0001-02; the Severo Ochoa Program through Grant SEV-2015-0563; and the Generalitat of Catalonia through Grant 2017-SGR-1765 is gratefully acknowledged. This paper has benefited from comments by participants in the Summer Forum of the Barcelona GSE, ASSET meeting, AMSE workshop in Growth and Development, Navarre-Basque Country Macroeconomics workshop, Madrid Mobility workshop, Regional Science Association meeting, and the Symposium of the Spanish Economic Association.

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References

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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
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