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...ity * Ben Gurion University, CEPR, CESifo, IZA, grade@bgu.ac.il 11. Introduction Intergenerational mobility issues have long been of interest for economists both theoretically and empirically (e.g., =-=Becker, 1981-=-, Becker and Tomes, 1988, Loury, 1981). Typically, innate ability differences play an essential role in theories explaining intergenerational mobility, see e.g., Maoz and Moav, 1999, Mookherjee and Na...

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... anticipating parental altruistic transfer – puts in too little effort from parental perspective. This is similar to the results in Gatti, 2005, and Lindbeck and Weibull, 1988, who in turn build upon =-=Becker, 1974-=-, 1981. It is essential for these results that the parents are unable to make their bequests fully contingent of children efforts; and that the scope for intergenerational bargaining on these issues i...

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...on University, CEPR, CESifo, IZA, grade@bgu.ac.il 11. Introduction Intergenerational mobility issues have long been of interest for economists both theoretically and empirically (e.g., Becker, 1981, =-=Becker and Tomes, 1988-=-, Loury, 1981). Typically, innate ability differences play an essential role in theories explaining intergenerational mobility, see e.g., Maoz and Moav, 1999, Mookherjee and Napel, 2006, for recent mo...

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...ifo, IZA, grade@bgu.ac.il 11. Introduction Intergenerational mobility issues have long been of interest for economists both theoretically and empirically (e.g., Becker, 1981, Becker and Tomes, 1988, =-=Loury, 1981-=-). Typically, innate ability differences play an essential role in theories explaining intergenerational mobility, see e.g., Maoz and Moav, 1999, Mookherjee and Napel, 2006, for recent models. This, h...

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...text and Hammarstedt and Palme, 2006, in the context of Sweden, using detailed datasets find strong evidence of income convergence from the first to the second generation of immigrants. Further, both =-=Borjas, 1995-=-, and Hammarstedt and Palme, 2006, in their different contexts, also discern a large variation across the immigrants' countries of origin, which in itself is a significant contributing factor to the i...

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... parents as the primary source of social influence, see also Lindbeck and Nyberg, 2006, and work cited there. This cited work, specifically, testifies to parental socialization of work attitudes, see =-=Eccles et al., 2000-=-. Augmenting the model with aspects pertaining to potential peer influence does not add fundamentally new insights. The young individual allocates time between effort nit+1 and leisure, 1- nit+1. The ...

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...is result is well consistent with recent empirical work that testifies to the importance of the origin country in determining the earnings of second generation immigrants, see Borjas, 1993, 1995, and =-=Fernandez and Fogli, 2007-=-. The latter paper specifically focuses on culture as a crucial determinant of work attitudes, concluding that cultural factors are transmitted from the first to the second immigrant generations. Furt...

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...erate socialization as in the above cited papers. 3of European aristocracy and with the success of second generation immigrants well documented in the literature, see Carliner, 1980, Chiswick, 1977, =-=Card, 2005-=-. The paper is related to the literature on intergenerational income mobility, as in Becker and Tomes, 1986, Loury, 1981, Maoz and Moav, 1999, Mookherjee and Napel, 2006. The emphasis here, however, i...

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...ibuting it to random variations in abilities. This, of course, is not to suggest that the latter is not relevant, and the two approaches should be rather viewed as complementary. Bertocchi, 2006, and =-=Galor and Moav, 2006-=-, are the only papers we are aware of that pursue the endogenization route, both to address the demise of the traditional class structure. The former paper focuses on the changes in the inheritance la...

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...elative to the poor ones, which is consistent with the decline 3 The evolving literature on the formation on social norms has proceeded mainly along two lines. One line emphasizes cultural evolution; =-=Galor and Moav, 2002-=-, is a seminal contribution that applies this approach to study long run economic growth. This paper is along the second line that focuses on deliberate socialization as in the above cited papers. 3o...

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...ission of work norms. This result is well consistent with recent empirical work that testifies to the importance of the origin country in determining the earnings of second generation immigrants, see =-=Borjas, 1993-=-, 1995, and Fernandez and Fogli, 2007. The latter paper specifically focuses on culture as a crucial determinant of work attitudes, concluding that cultural factors are transmitted from the first to t...

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...he key here is the moral hazard of the child, who – anticipating parental altruistic transfer – puts in too little effort from parental perspective. This is similar to the results in Gatti, 2005, and =-=Lindbeck and Weibull, 1988-=-, who in turn build upon Becker, 1974, 1981. It is essential for these results that the parents are unable to make their bequests fully contingent of children efforts; and that the scope for intergene...

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...In the model below, aspects of family interactions featured in the literature are exploited and imbedded in a dynamic dynastical context to address the issue at hand. 4 On the latter aspect, see also =-=Galor and Tsiddon, 1997-=-, whose model's implications are remarkably consistent with the swings in the US income distribution. 5 There some additional, more minor differences, such as the modeling of the motivation behind ins...

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...pean nobility, so much dominant in earlier centuries, completely gave away its power in the course of the nineteenth century. Likewise, the landowner class lost much of its economic significance (see =-=Bertocchi, 2006-=-, for a detailed discussion). In contrast, the bourgeoisie and the intelligentsia, rose from a negligible social and economic status to become dominating social classes. Another set of important examp...

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...ly and empirically (e.g., Becker, 1981, Becker and Tomes, 1988, Loury, 1981). Typically, innate ability differences play an essential role in theories explaining intergenerational mobility, see e.g., =-=Maoz and Moav, 1999-=-, Mookherjee and Napel, 2006, for recent models. This, however, is difficult to reconcile with historical rise and fall of entire groups of individuals. 1 The fall of historically established social e...

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...on maintain that "Work is what makes life worth living, not leisure," as compared to 38 percent of individuals with middle education level, and 34 percent of individuals with upper education level. 6 =-=Jacob and Lefgren, 2007-=-, provide yet another piece of supporting evidence. They find that low-income parents tend to place a larger weight of their children scholastic achievements relative to high-income parents, who value...

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...e is on the implications of the transmission of social norms as in Botticini and Eckstein, 2005, 2006, and Becker and Woesmann, 2007. Of most direct relevance here is Doepke and Zilibotti, 2007 (also =-=Doepke and Zilibotti, 2005-=-), who also study the implications of time preference as well as work norms on social mobility focusing on the 4occupational choices. 4 While closely related to this paper’s interest, Doepke and Zili...

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... Verdier, 2001, offer a general approach to the intergenerational transmission of preferences; Gradstein and Justman, 2002, discuss its implications in the context of comparison of schooling systems; =-=Botticini and Eckstein, 2005-=-, 2006, deal with some of its labor market implications; and Becker and Woesmann, 2007, empirically argue that the leading factor behind the Weberian work ethic attributed to Protestantism was not its...

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...econd line that focuses on deliberate socialization as in the above cited papers. 3of European aristocracy and with the success of second generation immigrants well documented in the literature, see =-=Carliner, 1980-=-, Chiswick, 1977, Card, 2005. The paper is related to the literature on intergenerational income mobility, as in Becker and Tomes, 1986, Loury, 1981, Maoz and Moav, 1999, Mookherjee and Napel, 2006. T...

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...en dependence on parental transfers. 5 The two approaches should be viewed as complementary. A third related strand is the literature on family interaction, starting with Becker’s 1974, seminal work. =-=Gatti, 2005-=-, and Lindbeck and Weibull, 1999, for example, discuss the efficiency implications of parental inability to commit to transfers. In a more specifically related work, Lindbeck and Nyberg, 2006, analyze...

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...focuses on deliberate socialization as in the above cited papers. 3of European aristocracy and with the success of second generation immigrants well documented in the literature, see Carliner, 1980, =-=Chiswick, 1977-=-, Card, 2005. The paper is related to the literature on intergenerational income mobility, as in Becker and Tomes, 1986, Loury, 1981, Maoz and Moav, 1999, Mookherjee and Napel, 2006. The emphasis here...

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... Palme, 2006, in their different contexts, also discern a large variation across the immigrants' countries of origin, which in itself is a significant contributing factor to the immigrants' earnings. =-=Hansen and Kucera, 2004-=-, discover convergence in educational attainment in Canada. Card, 2005, reviewing several recent studies, comes to the conclusion that second generation immigrants have higher education and wages than...

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...ction. Another relevant literature is on the implications of the transmission of social norms as in Botticini and Eckstein, 2005, 2006, and Becker and Woesmann, 2007. Of most direct relevance here is =-=Doepke and Zilibotti, 2007-=- (also Doepke and Zilibotti, 2005), who also study the implications of time preference as well as work norms on social mobility focusing on the 4occupational choices. 4 While closely related to this ...