Unobservable Family and Individual Contributions to the Distributions of Income and Wealth

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Abstract
"This paper uses combinations of full brothers, half brothers, and fathers and sons to measure the effect of common family background on a household's income and wealth. While the data are drawn from a nineteenth-century [U.S.] population, the intraclass correlation for income ranges from .13 to .18, which is similar to that found in modern samples. Intraclass correlations for wealth are significantly higher (.18-.35) than are those for income. Intraclass correlations of half brothers compared to those for full brothers suggest that fathers play a dominant role in the transmission of the common family effect. When unobserved background is decomposed into individual and family effects, the individual effect dominates the family effect for income, while the family effect dominates the individual effect for wealth." A comment by Sherwin Rosen is included (pp. 80-2).

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