Matthew Staiger (Opportunity Insights), "The Intergenerational Transmission of Employers and the Earnings of Young Workers"

"The Intergenerational Transmission of Employers and the Earnings of Young Workers"

Matthew Staiger (Opportunity Insights)
September 12, 2023, 12:00 to 1:00 PM
Leacock 429

Abstract: To what extent do connections in the labor market shape intergenerational mobility? I use employer-employee linked data to study one important type of connection: jobs obtained at a parent’s employer. 29 percent of individuals work for a parent’s employer at least once by age 30. Exploiting transitory and idiosyncratic variation in the availability of jobs at the parent’s employer, I estimate that working for a parent’s employer increases initial earnings by 19 percent. The results are attributable to parents using their connections to provide access to higher-paying firms. Individuals with higher-earning parents are more likely to work for a parent’s employer and experience larger earnings gains when they do. Consequently, the elasticity of initial earnings with respect to parental earnings would be 7.2 percent lower if no one found a job through these connections. The findings raise the possibility that connections to firms through one’s social network could be an important determinant of intergenerational mobility.