Interpreting Gender Differences in Intergenerational Mobility∗

This paper investigates gender differences in economic mobility. In a sample of married couples constructed from the Panel Study of Income Dynamics (PSID), I find that the intergenerational elasticity of earnings for daughters is significantly lower than for sons. I ask whether this gap can be explained by three inter-related mechanisms: parental investments in human capital, positive assortative matching of spouses, and labor supply responses of married women to their husband’s earnings. I develop a dynamic general equilibrium model with parental investments to evaluate the relative contribution of the proposed mechanisms. The parameters are estimated using the method of simulated moments. My results show that labor supply responses explain about 83 % of the gender gap. They also suggest that parental investments are highly influenced by marriage market conditions, and that this influence is much stronger for daughters than for sons. As a consequence, the average human capital of men and women in the steady state would be reduced by 16 % and 45 % respectively if human capital investments did not affect spouse’s characteristics