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Like father, like son: Occupational choice, intergenerational persistence and misallocation

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  • Salvatore Lo Bello
  • Iacopo Morchio
Abstract
We develop a dynamic quantitative model of occupational choice and search frictions with multiple channels of intergenerational transmission (comparative advantage, social contacts, and preferences), and use it to decompose the occupational persistence observed in the UK. In the model, workers who choose their father's occupation find jobs faster and earn lower wages, which is consistent with patterns found in UK data. Quantitatively, parental networks account for 79% of total persistence. Shutting down parental networks or the transmission of preferences improves the allocation of workers, and thus yields welfare gains, while removing the transmission of comparative advantage generates welfare losses.

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  • Salvatore Lo Bello & Iacopo Morchio, 2022. "Like father, like son: Occupational choice, intergenerational persistence and misallocation," Quantitative Economics, Econometric Society, vol. 13(2), pages 629-679, May.
    • Handle: RePEc:wly:quante:v:13:y:2022:i:2:p:629-679
    DOI: 10.3982/QE1375
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    1. Gallipoli, Giovanni & Low, Hamish & Mitra, Aruni, 2020. "Consumption and Income Inequality across Generations," CEPR Discussion Papers 15166, C.E.P.R. Discussion Papers.
    2. Bamieh, Omar & Cintolesi, Andrea, 2021. "Intergenerational transmission in regulated professions and the role of familism," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 857-879.
    3. Almarina Gramozi & Theodore Palivos & Marios Zachariadis, 2020. "On the Degree and Consequences of Talent Misallocation for the United States," University of Cyprus Working Papers in Economics 09-2020, University of Cyprus Department of Economics.
    4. Gabriela Galassi & David Koll & Lukas Mayr, 2019. "The Intergenerational Correlation of Employment: Is There a Role for Work Culture?," Staff Working Papers 19-33, Bank of Canada.
    5. Elin Halvorsen & Serdar Ozkan & Sergio Salgado, 2022. "Earnings dynamics and its intergenerational transmission: Evidence from Norway," Quantitative Economics, Econometric Society, vol. 13(4), pages 1707-1746, November.
    6. Sébastien Fontenay & Libertad González Luna, 2024. "Can Public Policies Break the Gender Mold? Evidence from Paternity Leave Reforms in Six Countries," Economics Working Papers 1879, Department of Economics and Business, Universitat Pompeu Fabra.
    7. Arne F. Lyshol & Plamen T. Nenov & Thea Wevelstad, 2021. "Duration Dependence and Labor Market Experience," LABOUR, CEIS, vol. 35(1), pages 105-134, March.
    8. Haeck, Catherine & Laliberté, Jean-William, 2023. "Careers and Intergenerational Income Mobility," IZA Discussion Papers 16273, Institute of Labor Economics (IZA).
    9. Galassi, Gabriela & Koll, David & Mayr, Lukas, 2019. "The Intergenerational Correlation of Employment: Is There a Role for Work Culture?," IZA Discussion Papers 12595, Institute of Labor Economics (IZA).
    10. Alessandro Spiganti, 2020. "Inequality of opportunity, inequality of effort, and innovation," Economics Working Papers MWP 2020/02, European University Institute.
    11. Sébastien Fontenay & Libertad González, 2024. "Can Public Policies Break the Gender Mold? Evidence from Paternity Leave Reforms in Six Countries," Working Papers 1422, Barcelona School of Economics.

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