Josef Sigurdsson, Stockholm University

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

Abstract

Children frequently grow up to work in the same jobs as their parents. Using unique data on worker skills and personality traits, and administrative data on the labor market outcomes of Swedish men, we study how skills and parental background influence occupational choice, intergenerational mobility, and the allocation of talent in the economy. First, we document that sons are disproportionately more likely to follow into the same occupation as their fathers, across all skills and earnings levels. Second, exploiting structural change in employment in fathers' occupation, difference-in-differences estimates imply that occupational following leads to reduced earnings, concentrated among sons of low-income fathers and those whose skills are misaligned with those of incumbents in their father’s occupation. Third, we estimate a general equilibrium Roy model with costly occupational choice and heterogeneous entry barriers depending on parental background. We find that these entry barriers lead to misallocation: Equalizing entry costs across workers leads occupational following to fall by half. This leads to increased income and intergenerational mobility, with the largest income gains among sons of fathers in the bottom income decile. Our findings suggest that equalizing career opportunities may bring both equity and efficiency gains.

Josef Sigurdsson is an Assistant Professor of Economics at Stockholm University, Department of Economics, and a Research Affiliate at the CEPR. His research interests span the fields of labor economics and macroeconomics.

He was previously an Assistant Professor at Bocconi University and the Norwegian School of Economics.

You can read more about Josef Sigurdsson here

CEBI contact: Jakob Egholt Søgaard