Atkinson, A. B., and S. P. Jenkins. 1984. “The Steady-State Assumption and the Estimation of Distributional and Related Models.” Journal of Human Resources 19(3):358-376.

There is considerable interest in the estimation of linear structural equation models (including path analysis) of the evolution across generations of the distribution of income, of socioeconomic achievement, and of related variables. Given insufficient data, the estimation of the models has commonly proceeded by making assumptions which reduce the data requirements. In particular, it has been assumed (often implicitly) that the distribution of the variables being studied is in steady-state. In this paper we examine the role of this assumption and argue the need for care in its use.

Atkinson is on the faculty of the London School of Economics. Jenkins is a member of the University of Bath faculty. This paper is based on research supported by the Nuffield Foundation carried out in conjunction with A. K. Maynard, H. Sutherland, and C. G. Trinder, and by the SSRC Programme on Taxation, Incentives and the Distribution of Income. The authors are grateful to two referees for helpful comments on an earlier draft, and particularly to the referee who drew our attention to the significance of the fact that the model is over-identified. We retain responsibility for any remaining errors and omissions.

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