A Longitudinal Analysis of Sibling Correlations in Economic Status

Abstract

Numerous previous studies have used sibling correlations to measure the importance of family background as a determinant of economic status. The sibling correlations estimated in these studies, however, have been depressed by a failure to distinguish transitory and permanent income variation and, in some cases, by overly homogeneous samples. This paper presents a methodology to address these problems and applies it to longitudinal data from the Panel Study of Income Dynamics. Our main conclusion is that family background exerts greater influence on economic status than has been indicated by most earlier research.