Chart of the Day: Working for a Parent's Employer
My Chart of the Day comes from my co-author Matt Staiger’s job market paper “The Intergenerational Transmission of Employers and the Earnings of Young Workers”. In his paper, he looks at young men and women who work for their parent’s employer as their first stable job. Figure 1 of the paper shows the prevalence of this across sex, race/ethnicity, and parental earnings percentile.
Over most of the parental earnings distribution (except for the very top and very bottom), around 6% of daughters of all four race/ethnicity groups shown work for their parent’s employer as their first stable job. For sons, there is a bigger difference in the likelihood of working for their parent’s employer by race, with Hispanic sons most likely to follow in their father’s or mother’s footsteps, and Black sons the least. In the middle of the income distribution, the proportion of Hispanic sons working at their parent’s employer reaches almost 10%.
There are important implications of this intergenerational transmission of employers. Using variation in job availability at a parent’s employer as a source of exogenous variation, Staiger finds that working for a parent’s employer increases initial earnings by 31%. This, in turn, has important implications for earnings inequality. He estimates without young men and women getting the step up from getting a job at their parent’s employer, the intergenerational elasticity of earnings could be as much as 10% lower.
My Reading Notes: