Munich Personal RePEc Archive

Heritability of Lifetime Income

Hyytinen, Ari and Ilmakunnas, Pekka and Johansson, Edvard and Toivanen, Otto (2013): Heritability of Lifetime Income.

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Abstract

Using 15 years of data on Finnish twins, we find that 24% (54%) of the variance of women’s (men’s) lifetime income is due to genetic factors and that the contribution of the shared environment is negligible. We link these figures to policy by showing that controlling for education reduces the variance share of genetics by 5-8 percentage points; by demonstrating that income uncertainty has a genetic component half the size of its variance share in lifetime income; and by exploring how the genetic heritability of lifetime income is related to the macroeconomic environment, as measured by GDP growth and the Gini-coefficient of income inequality.

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