Quantifying the Role of Firms in Intergenerational Mobility

Arbeitspapier

We investigate the role of firms in intergenerational mobility by decomposing the intergenerational elasticity of earnings (IGE) into firm-IGE and individual-IGE using a two-way fixed effects framework. Using data from Israel, we find that the firm component is responsible for 22% of the overall IGE. We then explore potential mechanisms and find that education differences explain a large share of the individual-IGE, while place of residence and demographics are more important for the firm-IGE. Guided by these empirical patterns, we develop a novel method to estimate the role of skill-based sorting and find that it accounts for approximately half of the firm-IGE. Our results provide evidence that the intergenerational transmission of earnings encompasses more than just human capital, and highlight the importance of promoting equal access to high-paying firms and reducing labor market segregation in efforts to enhance equality of opportunity.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10758

Classification and Topics

• Classification: Wirtschaft ; Job, Occupational, and Intergenerational Mobility; Promotion ; Wage Level and Structure; Wage Differentials ; Mobility, Unemployment, Vacancies, and Immigrant Workers: General
• Subject: intergenerational mobility ; firm wage premium ; assortative matching ; skill-based sorting

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dobbin, Caue ; Zohar, Tom
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/282446
• Last update: 10.03.2025, 11:42 AM CET