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Impact of an Early-Career Shock on Intergenerational Mobility

Martti Kaila¹; Emily Nix^2,3; Krista Riukula⁴

¹ University of Glasgow · ² University of Southern California · ³ California Southern University · ⁴ ETLA Economic Research

Children’s and parents’ incomes are highly correlated, yet little is known about how early-career shocks contribute to this correlation. This paper focuses on a consequential labor market shock: job loss. We document three new results. First, adult children born into the bottom 20% of the income distribution have double the unemployment following job loss compared with those from the top 20% and 154% higher earnings losses. Second, this increases the rank-rank correlation 30% for those impacted. Third, richer parents provide career opportunities to their adult children after job loss, consistent with advantages from wealthy parents persisting well into adulthood.

DOI

10.1086/730322

Volume

43 (4)

Pages

1035-1062

Language

en

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BibTeX

Sources

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