Transmission of Family Influence

This paper studies intergenerational mobility—the transmission of family influence. We develop and estimate measures of lifetime resources motivated by economic theory that account for differences in life-cycle trajectories, and uncertainty about future income. We identify the effects of parents’ resources on child outcomes through policy shocks at different childhood ages that affect family investments. Parents’ expected lifetime resources are stronger predictors of child outcomes than the income measures traditionally used in the literature on social mobility. Moreover, while effects estimated through exogenous variation in parents’ expected lifetime resources are smaller in magnitude than their correlational counterparts, they are still sizable and largest in early childhood. The paper illustrates how integrating key insights from different literatures when studying intergenerational mobility allows for a better understanding of the importance of factors such as the family’s role, changes in individual life cycles across generations, and the expectations and trajectories individuals face across their lifetimes.