Employment Prospects Across Generations and the Intergenerational Persistence of Earnings

Abstract

We study how employment prospects are related to the employment status of parents using monthly job histories from the UK. We find that individuals whose father is employed have a 8 percentage points higher probability of being employed, driven by a 50 percent higher job-finding probability. These differences are robust to the inclusion of individual fixed effects, and are larger at young ages and when the offspring finds a job in the father’s occupation. Instead, we do not find significant differences by the employment status of mothers. By using a simple model of labor market transitions and on-the-job human capital accumulation, we show that the estimated job-finding probability differentials can account for up to 7 percent of the intergenerational persistence of earnings.