Three-Generational Associations in Socio-Economic Outcomes: New Evidence from the Panel Study of Income Dynamics

Fabian T. Pfeffer, University of Michigan

This contribution analyzes three-generational associations for a broad range of socio-economic outcomes, namely education, occupation, earnings, income, and wealth, based on nationally representative data for the United States. I apply two distinct but complementary perspectives on multigenerational associations: First, I document the degree of similarity in socio-economic standing among individuals of the third generation (G3) via cousin correlations. This “horizontal approach” captures the sum of all sources of three-generational factors involved in the socio-economic attainment of a current generation of adults. Second, to assess whether these multigenerational associations can be traced to the direct effects of selected socio-economic characteristics of grandparents (G1), I apply three-generational status attainment models. This “vertical approach” reveals the relative importance of measurable socio-economic characteristics of grandparents and parents. Finally, this paper begins to document sources of heterogeneity in multigenerational associations that may point towards the underlying social mechanisms.