Economic returns to reproducing parents' field of study

Abstract

AbstractResearch on the influence of family background on college graduates' earnings has not considered the importance of the match between parents' and children's field of study. Using a novel design based on within‐family comparisons, I examine long‐term earnings returns to reproducing parents' field of study in Denmark. I find that individuals whose field of study matches that of a parent have earnings that are 2 percent higher than those of their siblings with college degrees in different fields, on average. Earnings returns to field inheritance are highest in the fields of law (9 percent), medicine (6 percent), and engineering (4 percent) and are driven mainly by income from self‐employment. I find no direct evidence of nepotism as the earnings advantage does not arise from inheritance of parents' firms or employment in parents' occupational network. My findings indicate that, although a college degree generally equalizes family background differences in economic outcomes, there are additional payoffs to field inheritance, particularly in traditional fields characterized by a high degree of social closure and self‐employment.