The Growing Importance of Family and Community: An Analysis of Changes in the Sibling Correlation in Men’s Earnings

This study presents evidence that the correlation in brothers’ economic outcomes has risen in recent decades. We use two distinct cohorts of young men from the National Longitudinal Surveys and estimate that the correlation in earnings, family income and wages between brothers rose substantially between cohorts who entered the labor market in the 1970s and those who entered in the 1980s and early 1990s. This suggests that family and community influences shared by siblings have become increasingly important in determining economic outcomes. We find that the brother correlation in education did not change between these cohorts although the return to education did increase markedly. However, the rising return to schooling can account for at most, around 40 percent of the increase in the brother correlation in earnings.