Dynastic Human Capital, Inequality, and Intergenerational Mobility

Abstract

We estimate long-run intergenerational persistence in human capital using information on outcomes for the extended family: the dynasty. A dataset including the entire Swedish population, linking four generations, allows us to identify parents’ siblings and cousins, their spouses, and spouses’ siblings. Using various human capital measures, we show that traditional parent-child estimates underestimate long-run intergenerational persistence by at least one-third. By adding outcomes for more distant ancestors, we show that almost all of the persistence is captured by the parental generation. Data on adoptees show that at least one- third of long-term persistence is attributed to environmental factors. (JEL I24, I26, J12, J24, J62)