January 2020

IZA DP No. 12933: Short- vs Long-Term Intergenerational Correlations of Employment and Self-Employment in Europe

forthcoming as 'Intergenerational correlation of self-employment in Western Europe' in: Economic Modelling, 2022

This paper analyzes the existence of short- and long-term intergenerational correlation of employment and self-employment in European countries, using data from the European Union Statistics on Income and Living Conditions. Using longitudinal data for the period 2003-2016, fixed effect estimates show a significant short-term correlation between the current employment status of parents and that of their children. However, short-term correlation of self-employment seems to be driven only by father-son correlations. Conversely, using the special module on Intergenerational Transmissions for the year 2011, estimates show a strong and significant correlation between respondents' self-employment status, and that of their parents when respondents were 14 years old. This suggests that self-employment decisions are not related to short-term family labor supply decisions, but to long-term intergenerational transmission.