Previous studies of recent U.S. trends in intergenerational income mobility have produced widely varying results, partly because of large sampling errors. By making more efficient use of the available information in the Panel Study of Income Dynamics, we generate more reliable estimates of the recent time series variation in intergenerational mobility. Our results, which pertain to the cohorts born between 1952 and 1975, do not reveal major changes in intergenerational mobility.

The empirical literature on intertemporal labor supply behavior documents that the intertemporal elasticity of substitution of labor supply is very low, with a plausible range of zero to 0.2. Drawing upon the literature on the distribution of instrumental variables (IV) estimators, this paper demonstrates that this conventional wisdom is erroneous because it does not take into account the severe finite sample bias in these estimates that arise from weak instruments. This paper adopts several approaches to adjust for the problems induced by these weak instruments. The empirical results show that, when uncorrected for finite sample bias, the two-stage least-squares (2SLS) estimate of the elasticity is essentially zero, as in most of the previous studies, with its valid confidence interval being open-ended, [−∞, +∞]. However, when corrected for finite sample bias, the estimate becomes approximately 0.5 with a much tighter confidence interval.