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Generating Labor Market Inequality: Family Background, Employment Histories, and Earnings Disparities

Sun, August 12, 10:30am to 12:10pm, Philadelphia Marriott Downtown, Floor: Level 4, Franklin Hall 8

Abstract

Parents pass on a substantial amount of their economic advantage to their children. While sociologists have long sought to explain this intergenerational transmission of economic status, most of the transmission remains unexplained. I argue sociological explanations have been limited by their focus on pre-labor market factors, such as educational attainment. Instead, drawing on rich week-by-week measures of work experiences from the National Longitudinal Survey of Youth 1979 (NLSY79), I examine the role of labor market experiences—specifically, employment histories—in explaining the intergenerational transmission of economic status. I document a strong association between parental income and employment histories for men without a college degree. Among this group, men from higher-income families accumulate more work experience and tenure, and less unemployment, throughout their careers than men from lower-income families. Further, higher parental income is associated with a faster transition to stable employment for men with at most a high-school education, reducing the “churning” that characterizes the early labor market years of less-educated men. Consequently, conditioning on pre-labor market factors, employment histories mediate approximately one-third of the effect of parental income on earnings among non-college graduates. In contrast, regardless of parental income, college graduates quickly settle into stable, long-term employment. For the purposes of attaining stable employment, a college degree appears to be a powerful resource that leaves little room for family background effects. Ultimately, this study highlights the utility of examining how family background continues to affect individuals after they enter labor force.

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