Following in the family footsteps: Incidence and returns of occupational persistence

Children often follow their parents into the same occupations. However, evidence on the economic returns of occupational persistence is scarce and understanding these outcomes and their unequal prevalence across social strata may be key to deciphering patterns of social mobility. In this paper, I leverage administrative data from the Netherlands and a unique policy experiment to document the incidence of occupational transmission and estimate individuals' additional gains when choosing the same profession as their parents. I find that children are twice as likely to enter the occupation of a parent, with this rate substantially increasing for those above the top quartile of the parental income distribution. In addition, OLS estimated returns from occupational persistence are 2.3%. Using the random assignment to medical school provided by lottery-based admission, I focus on the medical profession to decompose these "naive" returns into a treatment and a selection effect of occupational transmission. Instrumental variable estimates show that "dynastic" doctors experience a 22% income boost relative to individuals who did not follow their parents. Furthermore, a substantial negative selection bias is identified in the OLS coefficients, suggesting that individuals who choose to follow their parents perform worse than their peers when pushed into different occupations. The large treatment effect, together with the unequal incidence along the income distribution, highlights the critical role of occupational transmission in exacerbating inequality.