A Detailed Picture of the Intergenerational Transmission of Human Capital

Numerous studies have shown that composite or summary measures of intergenerational mobility, such as the intergenerational elasticity, can mask important differences in life chances for children whose parents fall along various points of the status distribution. For example, the same intergenerational elasticity can characterize both a society with high levels of mobility in the middle of the parental distribution and less mobility in the tails, as well as a society with moderate levels of mobility throughout the distribution. Using data from the Health and Retirement Study (HRS), we consider how parental education relates to four separate outcomes in the children’s generation: education, lifetime earnings, health and (financial) wealth. We relate parents ’ educational ranks to children’s ranks on these four outcomes. By focusing on ranks, we are able to see full distributions of outcomes and can pick up within-group differences that even a relatively disaggregated analysis, like a quintile-based transition matrix, can obscure. We particularly focus on the tails of the children’s distribution— the 10th and 90th percentiles—plus the median. The “children ” in this study are Americans who have recently retired or are approaching retirement age. We are thus observing them at a point when their outcomes reflect accumulate