Labor-market drivers of intergenerational earnings persistence

Erika Forsberg (), Martin Nybom () and Jan Stuhler
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Erika Forsberg: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: Institute for Evaluation of Labour Market and Education Policy, P O Box 513, SE-751 20 Uppsala, Sweden
Martin Nybom: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: Institute for Evaluation of Labour Market and Education Policy, P O Box 513, SE-751 20 Uppsala, Sweden

No 2026:21, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: How does worker-firm sorting contribute to intergenerational persistence? Firm pay premia account for 36% of the intergenerational earnings elasticity in Sweden, rising to 50% with dynamic returns to firm-specific experience. Large pay gaps already open atlabor market entry, as children from privileged backgrounds find more favorable entry points; they then climb the firm pay ladder faster, switching firms more often and gaining more per switch. Skill sorting explains this widening but not the initial gaps, consistent with networks and employer learning. Privileged children’s firms are also more desirable overall, a gap that keeps widening after pay gaps stabilize.

Keywords: Intergenerational mobility; firm pay; worker sorting (search for similar items in EconPapers)
JEL-codes: D31 J31 J62 (search for similar items in EconPapers)
Pages: 84 pages
Date: 2026-10-02
New Economics Papers: this item is included in nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:ifauwp:2026_021

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