The Effect of Parental Occupation and Family Arragements on Occupational Choices among Brazilian Youth

This paper estimates the added worker effect and discouraged worker effect for young people in metropolitan Brazil. Its main contribution is to reveal how the transition to unemployment by the household head impacts labor supply among youth, considering the demographic changes – especially the size and composition of family arrangements – that Brazil has undergone in recent decades. We designed multinomial probit models (with and without correction of sample selection bias) covering the main metropolitan regions of the country using data from Brazil’s Monthly Employment Survey (PME) for the years 2002 to 2015, which compiles information on monthly transitions in the Brazilian labor market. Our findings point to evidence of a greater transition of young men and women to activation in the labor market, specifically from inactivity to unemployment, in periods when the household head became unemployed. On the other hand, there is no evidence of a statistically significant discouraged worker effect impacting these individuals. Furthermore, the parents’ occupational situation seems to have little effect on the transition to activation of young males in low-income families, unlike those belonging to wealthier families.