Intergenerational Earnings Links: Sons and Daughters

In thiis paper we explore evidence on the mobility of income across generations in Malaysia over the half century from the mid-1930s to 1988. This study is unique in that it studie sthe income mobility of daughters as well as sons using detailed retrospective earnings data available for fathers from the 1976 Malaysia Family LIfe Survey (MFLS-1) in combination with detailed retrospective earnings data for sons and for sons in-law from the 1988 follow-up MFLS-2 survey. We first explore traditional models of income mobility for sons and find similar results to the literature. We then further explore the roles of father's permanent earnings and father's and mother's education, as well as the child's own education, as correlates of children's earnings, exploiting the data on multiple children per family. Because of the importance of the child's education as a determinant of earnings, we further explore the role of father's earnings and parents' education as a correlate of the education of children and of sons in-law. The study finds that intergenerational linkages are just as strong for daughters as for sons, if not stronger. In addition, we also find that children's educational attainment is sensitive to their father's position in the earnings cycle when they are investing in education--that is, educational investments in Malyasia are subject to credit constraints. We also find that educational outcomes of sons, son's wives, daughters, and daughters' husbands share a common unobserved component implying that not only are the unobservables in a family linked, but also that the unobservables are linked between children of other families who have married into a family.