No. 995 - Dynasties in professions: the role of rents

The correlation between the socio-economic status of parents and their offspring has emerged as one of the stylized facts in economics, though cross-country and cross-occupation variation is remarkable. However, part of the underlying mechanism behind intergenerational persistence remains to be explained.

This paper contributes to the existing literature by providing evidence on the role of rents – (unfair) economic benefits that individuals obtain as adults because of their parents’ professional position. Several identification strategies, including the exploitation of discontinuities in regulation, suggest that rents significantly affect children’s propensity to follow their parents’ professional career paths.

From a policy perspective, the removal of anti-competitive regulation and other positional advantages may increase both social fluidity and labor market efficiency.

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