NBER WORKING PAPERS SERIES RELATIONSHIPS AMONG THE FAMILY TNCOMES AND TABOR MARKET OUTCOMES OF RELATIVES Joseph G. Altonji ‘Thomas A. Dunn Working Paper No. 3724 DMATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Maceachusetts Avenue ‘Cambridge, MA.02138, ‘Sune’ 1991 ‘This research was funded by the U.S. Department of Labor Bureau of Labor statistics under Contract itunber J-9-J-7-0094.. Opinions Stated in the paper do not necessarily represent the official Position or policy of the U.S. Department of Labor. Extensive Fesearch Support from the Canter for Urban Affaire and Policy Research, Northwestern University i9 also gratefully acknowledged. Avner Greif, Alex Idichandy, Michele Borsetti, assistance. “Gary Solon provided a mumber of useful suggestion Blane us for the shortcomings of the paper. This paper is part Of NBER’s research program in Labor Studies. Any opinions expressed are those of the authors and not those of the National Bureau of Economie Research.NBER Working Foper #3724 Sune $351 [RELATIONSHIPS AMONG THE FAMILY INCOMES AND TABOR HARKET OUTCOMES OF RELATIVES agemmact ‘This paper examines the Links botween the Labor market outcomes of individuals who are zelated by blood or by marriage using panel ‘data on pairs of matched family renbers fron the Naticnal Longitudinal Survey of babor Market Experience, We examine the intergenerat ional land sibling correlations among a broad set of labor market variables using tine average, mathod of menants and regression techniques Gosigned to reduce the biases introduced by transitory and measurenent erzors. We also show that family data can be exploited to investigate theories of job turnover, Labor supply, and che industry structure of Our primery findings follow. First, there are strong correlations between the family incoses of relatives. Gur method of fsonente estimates are .38 for brother pairs, .73 for sister pairs, and 156 for brother-sister pairs. The intergenerat ional tamily income cortelationa are .26 for father-son pairs, .48 for father-daughter pairs, ond .56 for both mother-son and mother-daughter pairs. thes estimates, except for the father-son result, are large compared to chose in the literature for the U.S. Second, we find strong correlations in che wages and earings of relatives. wage correlations vary around .40 for all family menber pairs, and earnings correlations vary around .35. Work hours of family menbors of the sane sex are also fairly strongly related. Fourth, we find strong correlations in the earnings of "in-laws" that may support @ theory of assortive mating in which parental earnings have value. ‘We also provide evidence thar job turnover rates depend on family characteristics and aro negatively correlated with labor market productivity. Further, we slow enat young men whose fachers work in igh wage industries tend chenzelves to work in high wage industries: Lastly, We find that 9 father's collective bargaining coverage has & strong positive antlvence on mia son's collective bargaining seacus. Joseph G. Altondi ‘Thomas A. Duna Center for Urban Actairs and Poltey Bopsrenent. of Beononics ‘Researen and Depatrent ond Econsmics _Horthwestezn University worehwostorn Universsey, Evanston, IL 60208 andTetroduetton ‘Tnta paper quancifiee che Links between the Labor aarket experiences ané economic outcones of individuals who are related by blood or by aarrtage uetng panel data on eibings, thelr parente, and thelr epouses from the four foriginal cohorts of the Nattonal Longitudinal Surveys of Labor Marker Experience, Our nain cbjectiver are (1) to provide becter extiaates of intra land intergenerational correlations in fantly income and aarninge, (2) £0 estimate earnings correlations among individuals who are related by aarriage, (2) te examine Sontergenerational Links among a broad eet of Labor market cutcooes, and (4) ¢@ show how incergenerational Labor market data can be used to examine che sources of Labor supply varistion, cheortes of Labor turnover tinates of ‘The fires purpose of the paper Ax simply to provide better lone of permanent incone and earnings levels between parence and fenitdren and among siblings. Many studies have examined (bling correlations, and « small maber he cxamined incergenerational family sncone correlattons in the 5.1 As Solon (1988a, 1989) potnes out, previous U.S. soudtes finding week {ncergenerationsl correlations (aee Becker and Tomes 2, see Becher and Tones (1986) for references. Solon (19894, 19890) provider a erivique of the previous insergenerarionl atudles and provider new Heuser (1981) use CPS data co analyze the relationship betveen son's earnings teu from response error. They obeain a correlation of él, (See chet Tele 4:)" Other proninent references in the Literature include Beiteals (1529), GetLtehes (1999), olen geval (1987), Corcoran and Jencke (1O79), Kearl and Pope (1985), and Olneck (2971), Lehrman and Taubaan (1985) and Teubean (1991). Aektngon a al (1983) find Large ineergeneractonal correlators using an English sample. We discus several other rel routes below 08