Empirical Essays in Intergenerational Mobility and Early Childhood Human Capital Formation

Abstract

This thesis contributes to the vast literature on intergenerational mobility and human capital formation. It consists of four papers presenting new facts on intergenerational mobility in Australia, and fresh insights into its measurement and underlying causal mechanisms. I use a variety of empirical techniques, and datasets ranging from millions to mere hundreds of observations.

In Chapter 2, I introduce a new Australian intergenerational dataset. I use this data to present a brief overview of intergenerational income mobility in Australia, at both a national and regional scale. Special attention is paid to a variety of measurement issues known to bias measures of mobility. Australia has a high degree of intergenerational mobility but still displays significant regional variations.

In Chapter 3, I examine the causes of regional variation in intergenerational mobility. Is it driven by sorting across regions or does it reflect a causal effect of place? I apply the methodology introduced in Chetty and Hendren (2018), exploiting variation in the age at which children move to identify a causal effect of exposure to place. I find that place matters, and it matters most in the teenage years. I identify two mechanisms that may explain a causal effect of place in the teenage years --- entry to local labour markets and peer effects.

In Chapter 4, I explore the intergenerational mobility of migrants to Australia. The second generation in some migrant communities is remarkably successful, even conditional on outcomes for the first generation. I present a new decomposition of intergenerational income mobility, and use it to highlight the pivotal role of education in second-generation success. I provide evidence of a role for culture and the context of migration in shaping the educational achievements and aspirations of the second generation.

In Chapter 5, I examine the causal influence of family income itself on child outcomes. I use the sharp date-of-birth eligibility cut-off for the Australian Baby Bonus to examine the effects of a modest boost to family income at birth. While the income boost is enough to induce parents to shift births, resulting in changes in infant health outcomes, it has no appreciable effect on Year 3 test scores. Show more