Occupational sorting and the transmission of self-employment between generations

ABSTRACT

Existing research has focused on factors explaining self-employment decisions, and the intergenerational transmission of self-employment has been posited as one explanatory factor. However, findings differ across countries, and the channels for such transmission remain unclear. Using data from the European Union Statistics on Income and Living Conditions, we analyse whether working in the same occupation as parents, conditional on parents’ self-employment, is related to being self-employed. Results show that working in the same occupation as parents is statistically and significantly related to being self-employed, which may indicate the existence of intergenerational transmission of self-employment. Furthermore, this relationship is especially significant between fathers and sons.

KEYWORDS:

• Intergenerational transmission
• self-employment
• occupation
• EU-SILC data

JEL CLASSIFICATION:

• D65
• J62
• E24

Statements

The authors declare no potential conflicts of interest. The data that support the findings of this study are available on request.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Countries from Eastern Europe are eliminated as they display different self-employment behaviours (Naudé 2010). This module has not been repeated since 2011.

² Results for single-parent individuals are robust and available upon request.

³ Variance Inflation Factors reveal no multicollinearity.

⁴ The analysis has certain limitations. For instance, no causal results can be estimated, we do not have information on life-cycle employment records, and we do not have information on business inheritance. Furthermore, estimated R-squared are relatively low, indicating that the models explain a low level of variance, but in line with existing research (Gimenez-Nadal et al., 2022).

Additional information

Funding

This work was supported by the Spanish Ministry of Science and Innovation [Project PID2019-108348RA-I00, funded by MCIN/AEI/10.13039/501,100,011,0331]; Cátedra Emprender [Project C006/2021_2]; Government of Aragón [Project S32_20R, funded by Program FSE Aragón 201].