Intergenerational mobility in earnings in Brazil spanning three generations and optimal investment in electricity generation in Texas

Abstract

This dissertation contains three essays. The first and second essays examine intergenerational mobility in earnings in Brazil using a data set spanning three generations. I use data from PNAD{a nationally representative household survey in Brazil. I build a three-generations data set consisting of 5,125 grandfather-father- son triplets by restricting the sample to households with adult sons. The first essay estimates some relationships between a child's earnings and family background implied by the Becker-Tomes model. I find that the estimates contradict some of its predictions, like the negative relationship between child's earnings and grandparent's earnings when controlling for parent's earnings. I propose a modified version of the Becker-Tomes model and find that the estimates are consistent with its predictions. I find that family background explains 34.9% of the variation in earnings among young males who live with their parents. If it were possible to eliminate the differences in investment in the children's human capital, the variation in earnings would fall by no more than 21.1%. Additionally, if there were no differences in endowments among children, the variation in earnings would fall by no less than 26%. The second essay examines the evolution of the intergenerational elasticity across generations and im- plications of marriage, education and fertility on mobility. I find that the estimate of the intergenerational elasticity in earnings is 0.847. The elasticity of earnings between son-in-law and father-in-law, 0.89, is approximately the same as the elasticity between son and father, 0.9. Additionally, controlling for fathers' percentile in the earnings distribution, each additional sibling decreases the sons' percentile by 1.77 percentiles. The third essay estimates an indicator of the optimal investment in electricity generation in Texas, and the associated efficiency gains. The essay presents a method to estimate the optimal investment in each technology available to generate electricity. The estimation considers the expected entry and exit of generation plants, future fuel prices, different demand elasticities and a potential carbon allowance mar- kets. Considering a carbon allowance price equal to two times the level in Europe, the optimal investment in electricity generation in Texas is zero.