At every percentile of the last generation's earnings distribution black sons experience a lower probability of upward mobility with respect to their fathers’ position than their white counterparts. Furthermore, the intergenerational elasticity of earnings is significantly lower for blacks than it is for whites. To analyze the intergenerational earnings transmission process this paper goes beyond a comparison of aggregated measures of parental income with their children's status by building a dynamic model of parental investments in children's human capital. The paper thereby incorporates recent findings in the literature on children's skill formation.
In addition to mean earnings, earnings shocks and parental separation negatively affect the accumulation of children's human capital during the parental life cycle. The model also permits differences in preferences and in the technology of human capital production and it allows for the possibility of statistical discrimination. To assess the relative contributions of these factors in explaining the observed differences in earnings mobility the model is estimated using data from the Panel Study of Income Dynamics which provides observations on parental life cycles as well as children's adult outcomes. Results show that the variation of parental income during childhood, caused by the instability of families and transitory income shocks is able to explain about half of the observed mobility gap. Furthermore, equalizing all disparities in parental background reverses the gap in upward earnings mobility.
This paper is about the effectiveness of parental aspirations in different social environments. I propose a model in which parents motivate their off-spring to perform optimally by setting aspirations. Children face distractions that make effort more costly than it appears to the parents. A distracting peer environment provides the incentive for parents to motivate their children, but if the environment becomes sufficiently deleterious, parents are dealing with children who are extremely sensitive to discouragement and parental aspirations loose their effectiveness. In the empirical part I investigate how parental aspirations affect children's test scores.
We systematically document remarkably high degrees of concentration in manufacturing exports for a sample of 151 countries over a range of 3,000 products. For every
country manufacturing exports are dominated by a few "big hits", which account for
most of export value and where the "hit" includes both finding the right product and
finding the right market. Higher export volumes are associated with higher degrees of
concentration, after controlling for the number of destinations a country penetrates.
This further highlights the importance of big hits. The distribution of exports closely
follows a power law, especially in the upper tail. These finding do not support a
"picking winners" policy for export development; the power law characterization implies that the chance of picking a winner diminishes exponentially with the degree of
success. Moreover, given the size of the economy, developing countries are more exposed
to demand shocks than rich ones, which further lowers the benefits from trying to pick
winners.