NBER WORKING PAPERS SERIES
RELATIONSHIPS AMONG THE FAMILY TNCOMES AND
TABOR MARKET OUTCOMES OF RELATIVES
Joseph G. Altonji
‘Thomas A. Dunn
Working Paper No. 3724
DMATIONAL BUREAU OF ECONOMIC RESEARCH
1050 Maceachusetts Avenue
‘Cambridge, MA.02138,
‘Sune’ 1991
‘This research was funded by the U.S. Department of Labor Bureau
of Labor statistics under Contract itunber J-9-J-7-0094.. Opinions
Stated in the paper do not necessarily represent the official
Position or policy of the U.S. Department of Labor. Extensive
Fesearch Support from the Canter for Urban Affaire and Policy
Research, Northwestern University i9 also gratefully
acknowledged. Avner Greif, Alex Idichandy, Michele Borsetti,
assistance. “Gary Solon provided a mumber of useful suggestion
Blane us for the shortcomings of the paper. This paper is part
Of NBER’s research program in Labor Studies. Any opinions
expressed are those of the authors and not those of the National
Bureau of Economie Research.NBER Working Foper #3724
Sune $351
[RELATIONSHIPS AMONG THE FAMILY INCOMES AND
TABOR HARKET OUTCOMES OF RELATIVES
agemmact
‘This paper examines the Links botween the Labor market outcomes
of individuals who are zelated by blood or by marriage using panel
‘data on pairs of matched family renbers fron the Naticnal Longitudinal
Survey of babor Market Experience, We examine the intergenerat ional
land sibling correlations among a broad set of labor market variables
using tine average, mathod of menants and regression techniques
Gosigned to reduce the biases introduced by transitory and measurenent
erzors. We also show that family data can be exploited to investigate
theories of job turnover, Labor supply, and che industry structure of
Our primery findings follow. First, there are strong
correlations between the family incoses of relatives. Gur method of
fsonente estimates are .38 for brother pairs, .73 for sister pairs, and
156 for brother-sister pairs. The intergenerat ional tamily income
cortelationa are .26 for father-son pairs, .48 for father-daughter
pairs, ond .56 for both mother-son and mother-daughter pairs. thes
estimates, except for the father-son result, are large compared to
chose in the literature for the U.S. Second, we find strong
correlations in che wages and earings of relatives. wage
correlations vary around .40 for all family menber pairs, and earnings
correlations vary around .35. Work hours of family menbors of the
sane sex are also fairly strongly related. Fourth, we find strong
correlations in the earnings of "in-laws" that may support @ theory of
assortive mating in which parental earnings have value.
‘We also provide evidence thar job turnover rates depend on family
characteristics and aro negatively correlated with labor market
productivity. Further, we slow enat young men whose fachers work in
igh wage industries tend chenzelves to work in high wage industries:
Lastly, We find that 9 father's collective bargaining coverage has &
strong positive antlvence on mia son's collective bargaining seacus.
Joseph G. Altondi ‘Thomas A. Duna
Center for Urban Actairs and Poltey Bopsrenent. of Beononics
‘Researen and Depatrent ond Econsmics _Horthwestezn University
worehwostorn Universsey, Evanston, IL 60208
andTetroduetton
‘Tnta paper quancifiee che Links between the Labor aarket experiences ané
economic outcones of individuals who are related by blood or by aarrtage
uetng panel data on eibings, thelr parente, and thelr epouses from the four
foriginal cohorts of the Nattonal Longitudinal Surveys of Labor Marker
Experience, Our nain cbjectiver are (1) to provide becter extiaates of intra
land intergenerational correlations in fantly income and aarninge, (2) £0
estimate earnings correlations among individuals who are related by aarriage,
(2) te examine Sontergenerational Links among a broad eet of Labor market
cutcooes, and (4) ¢@ show how incergenerational Labor market data can be used
to examine che sources of Labor supply varistion, cheortes of Labor turnover
tinates of
‘The fires purpose of the paper Ax simply to provide better
lone of permanent incone and earnings levels between parence and
fenitdren and among siblings. Many studies have examined (bling
correlations, and « small maber he
cxamined incergenerational family sncone
correlattons in the 5.1 As Solon (1988a, 1989) potnes out, previous U.S.
soudtes finding week {ncergenerationsl correlations (aee Becker and Tomes
2, see Becher and Tones (1986) for references. Solon (19894, 19890)
provider a erivique of the previous insergenerarionl atudles and provider new
Heuser (1981) use CPS data co analyze the relationship betveen son's earnings
teu from response error. They obeain a correlation of él, (See chet
Tele 4:)" Other proninent references in the Literature include Beiteals
(1529), GetLtehes (1999), olen geval (1987), Corcoran and Jencke (1O79),
Kearl and Pope (1985), and Olneck (2971), Lehrman and Taubaan (1985) and
Teubean (1991). Aektngon a al (1983) find Large ineergeneractonal
correlators using an English sample. We discus several other rel
routes below
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