Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282647 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16520
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We propose a twin family model linking twins with their spouses and children to quantify the relative importance of genetic and environmental factors in explaining the variance of socio-economic outcomes. Using data from the Danish Twins Registry and population registers, we test and relax the assumptions of the standard behavioral genetics model most frequently applied in economics using twins or adoptees. Exploiting an education reform differentially affecting parents, we find no evidence of gene-environment interactions. While we find some assortative mating based on genetic factors, differentially shared environments are key: they explain half of the variance in years of schooling, whereas genetic factors explain only nine percent. We find similar percentages for earnings, income, and wealth. Decomposing intergenerational elasticities reveals that shared environments explain 50% for earnings, 60% for income, 70% for wealth, and 80% for schooling. Family environments are more important than previously understood.
Subjects: 
nature
nurture
family background
genes
environment
inequality
JEL: 
D31
D63
E21
E24
I24
Document Type: 
Working Paper

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