Market competition and parental background wage premium: the role of human and relational capital

Computers as Stepping Stones? Technological Change and Equality of Labor Market Opportunities

“…1 Franzini & Raitano (2009) find persistent wage penalties of 10% and 16% for children of white and blue collar workers, respectively, compared to those with parents in managerial positions in 13 European countries, controlling for individual education. Franzini et al (2020) find that, controlling for education, children of tertiary graduates in Italy earn 5% higher wages. Britton et al (2016) report a 25% wage penalty in the UK between university graduates from higher income families and those from lower income families.…”

“…Several explanations for this penalty in labor market returns have been put forward: job referrals and nepotism (e.g. Holzer, 1988;Loury, 2006;Ioannides & Loury, 2004;Corak & Piraino, 2011), relational capital (Franzini et al, 2020), parental specific knowledge (Laband & Lentz, 1983;Lentz & Laband, 1989;Laband & Lentz, 1992;Lentz & Laband, 1990;Dunn & Holtz-Eakin, 2000;Lindquist et al, 2015), and behavioral codes (Friedman & Laurison, 2019). Generally, these mechanisms have been argued to hinder career advancements of workers from disadvantaged backgrounds.…”

Beyond human capital: how does parents’ direct influence on their sons’ earnings vary across eight OECD countries?

“…Theoretically, intergenerational mobility might also be driven by parental background-related children's traits other than productive cognitive and non-cognitive skills that are also rewarded by labour markets, such as social connections allowing children coming from a more advantaged background to exploit rents, especially in non-competitive markets (Franzini et al, 2020).…”

“…Alternatively, parents might invest in non-educational 'enrichment expenditures' that boost or signal other types of skills, ties, and traits attractive to employers (Lareau, 2003;Duncan and Murnane, 2011;Putnam, 2015), or might otherwise bridge the 'F-connection' between families, friends and firms (Ben-Porath, 1989) through personal networks, notably weak ties (Granovetter, 1995(Granovetter, , 2005Jackson, 2001). Relatedly, Franzini et al (2020) list a series of circumstances that might allow better connected children to receive higher wages since firms, especially in non-competitive markets, may find it convenient to pay a premium to better connected workers, also in order to boost firm's lobbying and rent-seeking activities.…”

Computers as Stepping Stones? Technological Change and Equality of Labor Market Opportunities

“…Several explanations for this penalty in labor market returns have been put forward: job referrals and nepotism (e.g. Holzer, 1988;Loury, 2006;Ioannides & Loury, 2004;Corak & Piraino, 2011), relational capital (Franzini et al, 2020), parental specific knowledge (Laband & Lentz, 1983;Lentz & Laband, 1989;Laband & Lentz, 1992;Lentz & Laband, 1990;Dunn & Holtz-Eakin, 2000;Lindquist et al, 2015), and behavioral codes (Friedman & Laurison, 2019). Generally, these mechanisms have been argued to hinder career advancements of workers from disadvantaged backgrounds.…”