How important is family background for labor-economic outcomes?

This paper uses Swedish register data to examine four classical outcomes in empirical labor economics: IQ noncognitive skills, years of schooling and long-run earnings. We estimate sibling correlations - and the variance components that define the sibling correlation - in these outcomes. We also estimate correlations for MZ-twins, who share all genes. We also extend the variance-component decomposition by accounting for birth order. We find that conventional intergenerational approaches severely underestimate the role of family background, and that future research should follow a more multidimensional approach to the study of family background. (C) 2012 Elsevier B.V. All rights reserved.