Matched data for parents and siblings in Israel were
used to decompose the sibling correlation in schooling and earnings into four
components: (a) A "genetic" component induced by inherited ability, (b)
Correlated effects induced by sharing common parents, (c) Contextual effects due
to common ethnicity, and (d) An endogenous component induced by interactions
between siblings. Most of the sibling correlation is due to the latter. Parents
have little to do with the sibling correlation. The sibling interaction
coefficients for schooling and earnings were positive, but it was considerably
greater in the case of schooling. It was shown that sibling interaction
increases inequality, especially in the case of schooling. However,
parent-children interaction contributes little to inequality. [PUBLICATION
ABSTRACT]
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