 |
Like Father, Like Son: Occupational Choice, Intergenerational Persistence and Misallocation
1 : Bank of Italy
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 78% 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.
