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Labour outcomes and family background

Working Paper 2016-414

Abstract

A large body of literature in economics aims to understand the transmission mechanisms through which intergenerational economic and social advantage persists. Evidence shows that individuals born into low socioeconomic status families tend to experience worse labour outcomes when adults than otherwise similar peers. Recessions, however, may have a significant impact on how certain elements of this transmission process operate in some countries but not in others (e.g. due to diverse changes in returns to education or occupation and the role of family networks). Using EU-SILC data for 2005 and 2011 we compare the different role of family background on labour outcomes in five EU countries before and after the Great Recession using a multidimensional family background indicator, that avoids undesirable cohort effects. Our results suggest that family background affects employment prospects and job quality (wages and being on a temporary contract) beyond its effect on education but we do not find significant evidence that this effect is substantially moderated by the economic cycle.

Authors: Silvia Avram, Olga Canto.

Keywords: family background, labour outcomes, returns to education, European Union,
JEL: I24, I26, J31, J62.