It Runs in the Family: Occupational Choice and the Allocation of Talent

Sigurdsson, Jósef and John Kramer

No 20099, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Children disproportionately enter their parents’ occupations. We examine the implications of this tendency for intergenerational income mobility and talent allocation in the economy. Using Swedish data on cognitive and non-cognitive skills, we estimate a general-equilibrium Roy model in which access to occupations depends on parental occupation. Equalizing access reduces occupational following by roughly one-half and increases income mobility by about one-third without reducing output. Gains are concentrated among sons of low-earning fathers with skills suited to higher-paying occupations. Quasi-experimental evidence exploiting long-run employment declines in fathers’ occupations supports the model estimates: reduced following improves skill matching and raises earnings.

Keywords: Misallocation; Roy model (search for similar items in EconPapers)
JEL-codes: E24 J24 (search for similar items in EconPapers)
Date: 2025-04
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