Research

This paper studies how access to the parental workplace affects career trajectories of children. The setting is the German vocational training system, where many young workers enter the labor market through firm-based apprenticeships. Using matched employer-employee administrative data and a novel household-linking algorithm, we identify approximately 700,000 children and their parents and examine whether starting an apprenticeship at the primary earner's employer improves subsequent labor market outcomes. To address endogenous sorting into connected firms, we implement an instrumental variables strategy exploiting transitory, firm-specific variation in competition among coworkers' children for a limited number of apprenticeship slots. Conceptually, we compare children whose parents work at the same firm but who enter the labor market in different years. We find that starting at the parent's employer increases earnings substantially at labor market entry. One year after apprenticeship start, connected entrants earn 15 percent more than comparable non-connected entrants; ten years after entry, the earnings advantage remains 11.5 percent. Dynamic estimates show that earnings gains are largest shortly after apprenticeship completion and are partly driven by access to higher-paying firms, higher retention at the training firm, and faster within-firm career progression. Over time, non-connected workers catch up through more frequent firm switching, and earnings differences disappear after 15 years.

We study the role of workplaces in intergenerational mobility using a novel dataset that enables the identification of household relations in German administrative data for more than 2 million children. First, we construct establishment-level mobility statistics using detailed matched employer-employee data. High-opportunity firms are high-paying firms with low social-class pay-gaps that are strongly segregated by parental income background, but substantially improve the subsequent earnings of low-income children hired. Second, we provide new evidence on intergenerational mobility in Germany and its geography. Local labor market structure, and especially our firm-level mobility measures, predict a large share of the regional variation in upward mobility. Third, we identify the causal effect of working for a high-mobility employer with two designs. Exploiting variation in children's ages at the time their fathers move across regions, we find that roughly half of the exposure effect of better places for low-income children runs through improved access to higher-mobility firms. A complementary design, which leverages variation in the composition of labor demand that labor market entrants face, implies that a one-standard-deviation increase in the mobility rate of the first employer raises earnings of low-income children at ages 29–33 by 12 percent. Fourth, we simulate how much intergenerational mobility would change if the allocation of workers to firms were parental-income-blind, holding fixed workers’ skills and occupations. We estimate that inducing parental-income-blind hiring reduces the rich-poor top-quintile outcome gap by 12%.

We estimate intergenerational mobility of immigrants and their children in fifteen receiving countries. We document large income gaps for first-generation immigrants that diminish in the second generation. Around half of the second-generation gap can be explained by differences in parental income, with the remainder due to differential rates of absolute mobility. The daughters of immigrants enjoy higher absolute mobility than daughters of locals in most destinations, while immigrant sons primarily enjoy this advantage in countries with long histories of immigration. Cross-country differences in absolute mobility are not driven by parental country-of-origin, but instead by destination labor markets and immigration policy.