Is Intergenerational Earnings Mobility Affected by Divorce

This study examines whether the intergenerational transmission of human capital, measured by intergenerational earnings mobility, is affected by divorce. Using the Panel Study of Income Dynamics, I find that, with each additional year in a family involving a single or a step parent, the earnings mobility between biological fathers and children rises and the mobility between mothers and daughters falls. However, using either sibling fixed effects or instrumental variable estimation, I find that the association between family structure and father-child mobility is explained by selection. These findings have two important implications. First, they imply that the increase in father-son mobility observed in other studies can be explained by the rise in single and step parent families over the same period. Second, these findings imply that the connection between fathers and children would have been weak whether or not a divorce occurred, which does not support the hypothesis that father absence is an important factor contributing to differences in child outcomes across family structures.