CORRELATION OF BROTHERS’ EARNINGS AND INTERGENERATIONAL TRANSMISSION

We estimate sibling correlations and intergenerational transmission\r\nof life cycle earnings within a unified framework that nests previous\r\nmodels. Using data on the Danish population of father/first-son/second-son\r\ntriads we find that intergenerational effects account for 72% of sibling correlations.\r\nThis share is higher than in previous studies because we allow for\r\nheterogeneous intergenerational transmission between families. For the first\r\ntime, we show significant U-shaped life cycle variation in sibling correlations,\r\nconsistent with human capital models. Estimates of intergenerational\r\nmobility are of greater value than previously thought for understanding the\r\nrole of the family in explaining earnings inequality.