Occupational Choice and Social Mobility

• In Event: 30620 - Section on Inequality, Poverty, and Mobility Roundtables
  In Refereed Roundtable (60 minute): Table 9: Socioeconomic Stability and Vulnerability

Abstract

This paper uses population-wide administrative data from Finland to examine the underlying drivers and aggregate implications of occupational following—when children enter into their parent’s occupation—for the labor market, social mobility, and total output. I first document that occupational following is a widespread feature of the labor market. Second, I show that pre-labor market multidimensional skills and educational choice statistically explain 19% of following among all 43 two-digit occupations, and 53% among white collar ones. Third, I use an instrumental variables strategy to show that, conditional on pre-labor market skills and education, occupational following leads to income gains of 5.5% and fewer job separations. I then combine these mechanisms into a model of educational and occupational choice. While I find that intergenerational links play a sustained role throughout the pre-labor market and labor market years, the intergenerational transmission of occupation-specific skills is most important in driving occupational following. Lastly, differences in pre-labor market multidimensional skills and educational choice—two potential policy levers—are also a key driver of occupational following and are responsible for 87% and 42% of the class gaps in white collar occupational attainment and elite occupational attainment, respectively.

Author

• Samuel Solomon, Yale University