Genetics and Economic Mobility

GENETICS and economic mobility Jessica Kronstadt, The Urban Institute KEY FINDINGS: • The literature suggests that genetics play a role in intergenerational mobility; however, it is unclear how environmental factors moderate the effects of genetics. • While evidence suggests a strong genetic link to cognitive skills, these skills appear to explain only a small share of the intergenerational correlation of income. • Studies document that a large portion of medical conditions have an underlying genetic component, implying that the inheritance of conditions that limit work may reduce intergenerational mobility. • Some evidence suggests a link between genetics and antisocial behaviors that reduce individuals‟ academic and labor market successes and economic mobility. One of the ways that economic status could be transmitted from one generation to the next is if parents pass on to their children the genetic endowments that help them to attain their economic position. Studies comparing siblings with different degrees of genetic similarity and adopted children to biological ones, find that genetics play a substantial role in intergenerational economic mobility. A range of traits—from physical appearance to cognitive skill—are potential targets for this type of genetic transmission. It is important to note, however, that although genes may predispose individuals to certain behaviors, environmental factors can amplify or counteract those influences. Jencks and Tach (2006)1 summarize how parents‟ and children‟s economic status could be correlated via genetics: “If genetic variation affects any of the traits that labor markets reward, then genetic variation will affect economic success. If the labor market still rewards the same traits a generation later and genes still affect these traits, then biological children of a successful parent will still tend to have traits that the labor market rewards, even if the children have no social contact with this parent.”(p. 33) A range of traits may be transmitted this way—including cognitive skills and personality traits. Health and mental health have genetic components and could be linked to differences in economic outcomes. Additionally, some physical traits serve as good predictors of income. For example, one study finds wage differentials between individuals judged to be „below average‟ and „above average‟ in appearance of 14 percent for men and 9 percent for women, after controlling for other factors including health and occupation (Bowles et al. 2001, citing Hamermesh and Biddle 1994). Another study finds that among males, height as a teenager helps predict adult wages (Persico et al. 2004). (See also discussion of nutrition and obesity in Kronstadt Health and Economic Mobility review.) Because of the genetic components of these traits, it is possible that a portion of the intergenerational transmission of status could be mediated by these physical characteristics. In almost all cases, these cognitive and noncognitive characteristics are influenced by multiple genes, so the genetic inheritance process is a complex one. As summarized in the table below, the Role of Genetics in Intergenerational Mobility, there is some evidence (mostly based on international data) that genetics contribute to intergenerational persistence. Estimates of the Role of Genetics in Intergenerational Mobility Study Methods and Key Estimates Jencks and Tach 2006 Extrapolates from twin and adoption data in Sweden and the United States. o About two-fifths of the intergenerational correlation of adult earnings is accounted for by genetic similarities. Bowles and Gintis 2001 Extrapolates from twin correlations from Ashenfelter and Krueger (1994). o Genetics and environment each contribute 0.2 to the intergenerational correlation of earnings (for a total of 0.4). o Genetics and environment each contribute 0.14 and assets contribute 0.18 to the intergenerational correlation of income (for a total of 0.46). Björklund et al. 2005 Compares different types of siblings in Sweden (identical and fraternal twins and singletons). o Most conservative estimates suggest that genetics account for 20 percent of earnings inequality for men and more than 10 percent for women. Björklund et al. 2006 Reviews Swedish adoption data. o For the transmission of education from mothers to children, genetics and prenatal conditions contribute more than environment. o For the transmission of long-run earnings and income from father to child, environment plays a larger role than genetics. o Prenatal conditions play a small role in the intergenerational transmission of status from mother to child. Björklund et al. Also uses Swedish adoption data. Compares six different family 1 The authors are paraphrasing an argument laid out by Herrnstein (1971). 2007 circumstances: raised by both biological parents, raised by the biol