Employment prospects across generations and the intergenerational persistence of earnings

We study how the correlation of employment across generations affects the intergenerational persistence of earnings in a simple model of labor market transitions and human capital accumulation. Using data from the United Kingdom, we first document that individuals whose father is employed have an 8 percentage points higher probability of being employed, driven by a 50 percent higher job-finding probability. We do not find similar patterns for job-separation probabilities. Calibrating our model to match these patterns, we find that the estimated job-finding probability differentials can account for up to 9 percent of the intergenerational persistence of earnings.