cost of the transition to a market economy. We find a substantial impact of

recession on the demand for higher education, which can potentially give rise

to large long-term costs associated with the transition.

Previous work with the RLMS has been mainly concerned with the impact

of transition on the structure of employment and the returns to human

capital. Berger et al. (2001) find limited training outside the worker’s own

field when compared with the United States, which, consistent with our findings,

would limit income mobility (see also Clerk, 2003)). Gorodnichenko

and Sabirianova Peter (2005) estimate the returns to schooling at different

quantiles of the wage distribution and find substantial lower returns at the

top of the distribution. Maltzeva (2009) finds that the return to job mobility

is small for workers over 25, so job mobility is not a source of higher returns

to education. These claims are consistent with the finding in this paper that

high earners pass the ability to earn high wages to their children independently

of human capital acquisition or progression up the jobs ladder. 2

We use the RLMS for the maximum currently available period, 1994-2013,

to extract earnings and other characteristics data for fathers or mothers and

their children. We then estimate the factors that explain the educational attainment

and earnings level of children in terms of a variety of characteristics,

including parents’education and earnings. Section 2 discusses our empirical

modelling approach. Section 3 describes the data and explains how we extract

the sample of parents and children that we use in our estimation. Section

4 reports and discusses the estimation results. Section 5 makes use of the

estimation results to derive transition probabilities across educational groups

for men and women and finally, the concluding section, gathers together the

most important findings and draws out some policy conclusions. Detailed

reporting of estimation results is collected in several Appendix tables.

2 For more studies on income mobility and the returns to human capital see Lukiyanova

and Oshchepkov (2012), Gimpelson and Kapeliushnikov (2007) and Lukiyanova (2010).


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