From the Cradle to the Grave: The Influence of Family Background on the Career Path of Italian Men
| DOI | http://doi.org/10.1111/obes.12237 |
| Author | Vona Francesco,Raitano Michele |
| Published date | 01 December 2018 |
| Date | 01 December 2018 |
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©2018 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd.
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 80, 6 (2018) 0305–9049
doi: 10.1111/obes.12237
From the Cradle to the Grave: The Influence of Family
Background on the Career Path of Italian Men*
Raitano Michele† and Vona Francesco‡
†Department of Economics and Law, Sapienza University of Rome, Via del Castro
Laurenziano 9, 00161, Rome, Italy (e-mail: michele.raitano@uniroma1.it)
‡OFCE SciencesPo and SKEMA Business School, Universit´eCˆote d’Azur (GREDEG), 60
Rue Dostoievski, 06902 Sophia Antipolis, France (e-mail: francesco.vona@sciencespo.fr)
Abstract
Using a longitudinal data set that contains detailed information on working histories of
Italian men, weinvestigate the relationship between parental background and sons’ earnings
profiles. We find that the parental influence on sons’ earnings persists over the career and
that the direct influence controlling for sons’ education is large and grows during the
working career.After twenty years of experience, our baseline specification indicates that
an additional year of parental education is associated with a 2.0% increase in sons’ wages,
while an additional year of son’s education is associated with a 4.8% increase. We use
educational mobility between parents and sons to disentangle this influence into a glass
ceiling effect – a premium for well-off children who have high educational attainments –
and a parachute effect – a premium for well-off children who acquire less education than
their parents. We find that both effects contribute to explain the steeper earnings profiles
of the well-off sons, consistently with the idea that family ties play a crucial allocative role
in the Italian labour market.
I. Introduction
Two well-known empirical regularities in the literature on earnings’ dynamics are that
wages grow with experience and that the steepness of the experience-earnings profile is
heterogeneous across different workers’ groups. Existing research finds that high-skilled
workers have a steeper profile than low-skilled ones, using education as a proxy for skills
(Rubinstein and Weiss, 2006). While this evidence is potentiallyrelevant to the literature on
intergenerational inequality because education and skills depend on parental background
JEL Classification numbers: J62, J24, J31.
*We thank Brian Bell, the editor, an anonymous referee and Maurizio Franzini for their useful comments and
suggestions. This paper benefits from comments at the followingseminars: Fifth Meeting of the Society for the Study
of Economic Inequality/ECINEQ (Bari), OFCE workshop on inequality and macroeconomic performance (Paris),
DISES invited seminar at Ancona University and conference ‘Causes and consequences of inequality and social
mobility: what can be done?’ held at Sapienza University of Rome. Michele Raitano thanks Giacomo Brodolini
Foundation for the access to theAD-SILC database.
From cradle to grave role of parents 1063
(Holmlund, Lindahl and Plug, 2011), no research has attempted to investigate directly how
the experience-earnings profiles depend on family background.1
Clearly, the positive correlation between education and parental background should
produce steeper earnings profiles for well-off children, but this is not the only channel
through which family background can affect the steepness of the experience-earnings
profile. Indeed, education being equal, a more advantaged family background is likely to
directly affect the returns to experience, because a better background might be associated
with both additional workers’ skills (cognitive and soft skills) and connections useful to
find a better job match in the labour market.
This paper fills a gap in the literature by documenting the persistency of these direct
channels of inequality transmission over the children’s working career. In particular, we
provide new evidence on the heterogeneity in the experience-earnings profiles depend-
ing on parental background. We then propose a simple methodology to disentangle the
mechanisms that could explain the persistency in the direct influence of parental back-
ground along the children’s careers.
Our paper takes advantage of a unique longitudinal data set that contains information
on family background, educational attainment and detailed career histories of cohorts of
Italian men who entered the labour market between 1975 and 2000.The impressive length
of our panel allows us to estimate the influence of parental background – measured using
parental education – on children’s earnings conditional on children’s education and effective
experience since the entry in the labour market.
Italy is an intriguing country for research on intergenerational inequality: on the one
hand, it has one of the lowest levels of social mobility among developed countries (Corak,
2013); on the other hand, it has a tuition-free and rather egalitarian public education system
(Checchi, Ichino and Rustichini, 1999). In addition, Italy is well knownas a countr y where
family connections havea considerable effect on both job finding rates and the probability of
joining top occupational groups (particularly in liberal professions; Pellizzari et al., 2011;
Aina and Nicoletti, 2014; Mocetti, 2016).2In recent comparisons across EU countries, the
relatively lowsocial mobility of Italy is partially explained by a wage premium to children
of well-off parents (e.g. according to their occupation) who end up in low- and medium-
paid occupations, compared to those holding the same occupation but coming from less
advantaged families (Raitano and Vona, 2015a).
Our empirical analysis reveals that the influence of family background on children
earnings persists over their careers. Our baseline estimate suggests that, controlling for
the influence of children’s education, a one-year increase in parental education is associ-
ated with a 2.0% increase in children’s earnings after twenty years of work experience.
Importantly, approximately 3/4 of this effect is formed during the working career rather
than in the first job.
1An exception is the short paper of Hudson and Sessions (2011). The literature on intergenerational inequality
has only indirectly dealt with this issue when computing the life-cycle bias in the estimate of the intergenerational
elasticity between children’s and parents’ incomes. See section II for a detailed review.
2For the UK (another country characterized by low social mobility), Crawford et al. (2016) document a large
earnings advantage for well-off children within the group of tertiary graduates, while Macmillan, Tyler and Vignoles
(2015) and Gutierrez, Micklewright and Vignoles (2014) find that parental networks are important to attain top
managerial and professional jobs. However, Gutierrez et al. (2014) do not find a clear direct influence of some
proxies of parental networks on wages.
©2018 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd
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