Intergenerational Occupational Mobility and Labor Productivity
62 Pages Posted: 14 Apr 2017
Date Written: September 2016
The paper documents that intergenerational occupational persistence is significantly higher in poor countries even after controlling for cross-country differences in occupational structures. I posit that high occupational persistence in poor countries is symptomatic of underlying talent misallocation. Constraints on education financing forces sons to choose fathers' occupations over the occupations of their comparative advantage. A version of Roy (1951) model of occupational choice is developed to quantify the impact of occupational misallocation on aggregate productivity. I find that output per worker drops by a factor of three relative to the benchmark US economy for the country with the highest level of occupational persistence.
Keywords: Intergenerational occupational mobility, misallocation of talent, labor productivity, financial frictions
JEL Classification: J62, O11, O15, O16, O57
Suggested Citation: Suggested Citation