The Journal of Economic Inequality

, Volume 5, Issue 2, pp 159–178 | Cite as

The effects of measurement error and omitted variables when using transition matrices to measure intergenerational mobility

  • Donal O’Neill
  • Olive Sweetman
  • Dirk Van de gaer
Article

Abstract

This paper examines the consequences of specification error when transition matrices are used to analyse patterns of intergenerational mobility. We show that classical measurement error in both the child’s and parent’s earnings can lead to biased results, with summary mobility measures biased by as much as 20% in some cases. Furthermore our results suggest that the extent of the bias is most severe in the tails of the distribution. Omitted conditioning variables appear to have a modest effect on transition matrices in our model.

Key words

transition matrices specification error intergenerational mobility 

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Copyright information

© Springer Science+Business Media, Inc. 2006

Authors and Affiliations

  • Donal O’Neill
    • 1
  • Olive Sweetman
    • 1
  • Dirk Van de gaer
    • 2
    • 3
  1. 1.Economics Dept. and NIRSAN.U.I. MaynoothMaynoothIreland
  2. 2.SHERPPAGhent University, F.E.B., Vakgroep Sociale EconomieGentBelgium
  3. 3.CORELouvain la NeuveBelgium

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