Abstract
Using data linked across generations in the Panel Study of Income Dynamics, I estimate the relationship between exposure to volatile income during childhood and a set of socioeconomic outcomes in adulthood. The empirical framework is an augmented intergenerational income mobility model that includes controls for income volatility. I measure income volatility at the family level in two ways. First, instability as measured by squared deviations around a family-specific mean, and then as percent changes of 25 percent or more. Volatility enters the model both separately and interacted with income level. I find that family income instability during childhood has a small, positive association with high school dropout– one which appears driven by volatility among children from lower income households. Evidence suggests that volatility exposure generally has a minimal impact on intergenerational outcomes relative to permanent income.
Document Type
Research Paper
Publication Date
8-2012
Discussion Paper Number
DP 2012-03
Repository Citation
Hardy, Bradley, "Childhood Income Volatility and Adult Outcomes" (2012). University of Kentucky Center for Poverty Research Discussion Paper Series. 44.
https://uknowledge.uky.edu/ukcpr_papers/44
