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Dynastic Capital and the Inheritance of Social Advantage

Author

Listed:
  • Lovenheim, Michael

    (Cornell University)

  • van Egeraat, Eppie

    (NHH)

  • Willén, Alexander

    (Norwegian School of Economics)

Abstract

We use Norwegian register data to examine how social capital is transmitted across generations. We construct a measure of families' social position based on six dimensions: elite education, elite occupation, executive status, corporate elite, elite positions in top firms, and elite tract. Social capital is highly persistent across generations and strongly predicts children’s income and access to elite positions, even conditional on parental income, wealth, education, and ability. Horse-race regressions suggest that social capital is a distinct dimension of advantage that is as important as parental income and cognitive ability in shaping children's outcomes. The influence of social capital grows over the life cycle, and reaching the top of the income distribution requires both high inherited income and social capital. Accounting for social capital also alters conventional estimates of income-based mobility, indicating that part of what is typically attributed to inherited income reflects the transmission of social position. Quasi-experimental evidence from adoptions and parental lottery prizes suggests that these patterns reflect environmental transmission rather than genetic inheritance or direct financial resources.

Suggested Citation

  • Lovenheim, Michael & van Egeraat, Eppie & Willén, Alexander, 2026. "Dynastic Capital and the Inheritance of Social Advantage," IZA Discussion Papers 18862, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18862
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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