Intergenerational mobility, sibling inequality and borrowing constraints

This paper studies differences in social mobility between rich and poor families. The paper shows that borrowing constraints retard social mobility among the poor by preventing poor parents from investing optimally in the their children’s human capital. This evidence contradicts several recent studies that argue that innate ability is the overriding determinant of socioeconomic performance in the United States. The paper also shows that sibling inequality appears to be independent of parental wealth, which in turn contradicts the predictions of various economic models of resource allocation within the family.  2002 Elsevier Science Ltd. All rights reserved. JEL classification: J13; J62; J68