Genetic endowments are fixed at conception, and they remain constant over the life course of individuals. Therefore, genetic inequality contradicts the widespread goal of providing equal educational opportunities to all members of society. In line with this policy goal, there is a long-standing literature in economics, sociology, and psychology that poses “the question of how well schools reduce the inequity of birth” (Coleman et al., 1966, p.36). In this paper, we investigate the question of how well schools address inequalities based on genetic disadvantages by providing the first causal study to estimate the interaction between genetic endowments and school quality. To this end, we combine Norwegian data on genetic trios (mothers, fathers, fathers) with validated measures of school value-added. Our (preliminary) findings suggest that schools equalize opportunities by reducing genetic gradients in reading (but not numeracy).

While previous research has shown that disadvantaged young people are less likely to work in professional occupations than their advantaged peers, even conditional on their education, until now little has been known about the reasons for this - are they applying for professional entry-level roles and not being hired, or are they not applying in the first place? Using unique recruitment data from 17 large employers' graduate programmes, we are able to answer this question for the first time. We find that applicants from lower SEB groups and ethnic minority groups are well represented among the applicant pool, but disproportionately do not receive job offers, even when considering applicants with similar prior attainment and other demographic characteristics applying to similar roles. Around half of the gap in job offers between working class and professional background applicants appears during the application sift and online test phase of the process. The other half of the gap in offers emerges at the face-to-face stages. For ethnic minority groups, the majority of the gap in offer rates emerges at the application sift and online test phase, rather than at the face-to-face stage. Women are typically underrepresented in the applicant pool across entry routes but are more likely to achieve a job offer than otherwise similar men, among those who do apply.

Apprenticeships play a key role in enabling successful school-to-work transitions in many countries but, in the presence of imperfect information, the specificity of this type of training may entail important costs for those working outside their training fields. I study this issue in one of the most prominent training settings, the German apprenticeship system. Using administrative data and a broad occupational classification, I find that 40% of individuals work in occupations different from their training. I estimate the cost of mismatch using vacancy instruments and extend methodological approaches in high-dimensional selection settings. Lacking training in one’s occupation entails an average wage penalty of 14%, the equivalent of two years of work experience. The penalty increases with the task distance between training and occupation. My findings suggest that retraining is crucial to mitigate the adverse consequences from imperfect information in specialized training settings.

Co-Authors: Erika Forsberg and Martin Nybom

To what extent does the sorting of workers across firms contribute to intergenerational persistence, and why? We show that differences in firm pay premia account for 31% of the intergenerational elasticity of earnings in Sweden, rising to 38% when including dynamic returns to firm-specific experience. Firm pay gaps open already at career start, suggesting that children from more privileged backgrounds find more favorable entry points to the labor market. Their pay advantage widens further in early career as they climb the firm pay ladder faster, switch firms more frequently and secure higher pay gains conditional on switching. Skill sorting explains most of the widening in early career, but not the initial pay gaps at career start. These results are robust to accounting for compensating differentials and using alternative measures of firm quality.

This paper shows that the local availability of universities acted as a catalyst in the catch-up of women in higher education that has been documented for developed countries in the latter half of the 20th century. It uses the foundation of new universities in the 1960s and 1970s in West German regions which previously did not have a university as a case study to understand how women’s mobility and education decisions interact. I first document women’s low regional mobility in post-war West Germany along with their low educational attainment. Second, I exploit that the university expansion exogenously brought universities to women’s doorsteps in a difference-in-differences (DiD) strategy. Comparing regions which experienced a university opening within 20 km to those where no university was opened, I show that women benefited more than men from a close-by university opening, closing the local gender gap in university education by about 72%. Third, I provide evidence that local universities partly increased university education through reduced costs, while part of the effect is due to higher expected returns, highlighting an important second channel through which universities promote education to local youths.

Pay inequality stems both from firm pay-setting and from workers' individual characteristics. Yet, intergenerational mobility research focuses on transmission of individual traits, and has failed to test how firms shape the inheritance of inequality. We study this question using three decades of Swedish population register data, and decompose the intergenerational earnings correlation into firm pay premiums and worker effects. One quarter of the intergenerational earnings correlation at midlife is explained by sorting between firms with unequal pay. Employer or industry inheritance account for a small share of this firm-based earnings transmission. Instead, high-education and high-occupation workers disproportionately land at high-paying firms. Parental referral networks and the inheritance of industry and labor market context play a supplementary role. As workers with high-education or high-status jobs are increasingly also employed at high paying firms, firm sorting could become increasingly important to intergenerational earnings transmission.

This paper presents Distributional National Accounts (DINA) for Germany from 1992 to 2016. We combine personal income tax files with SOEP survey data to estimate the distribution of national income following the DINA method established by Piketty et al. (2018). We find that economic growth in Germany has been pro-rich from 1992 to 2007 and pro-poor from 2007 to 2016. But despite rising labor incomes for the bottom 50% since 2007, the income gap between the bottom 50% and the top 10% has widened. The polarization is driven by continuously increasing labor income of the lower 9% of the top decile (P90-99). The top 0.1% receives ca. 7% of national income, which is similar to the United States and twice as high as in France.

It has long been known that conventional approaches to finite sample inference for inequality measures based on asymptotic methods or the standard bootstrap do not perform well, even in large samples. See, e.g., Davidson and Flachaire (Journal of Econometrics, 2007) and Cowell and Flachaire (Journal of Econometrics, 2007). The source of the problem is the heavy-tailed nature of income distributions, with a relatively high prevalence of influential high-income outliers in datasets. Can researchers do better? The answer is yes, in principle. Davidson and Flachaire (DF, 2007) and Cowell and Flachaire (CF, 2007) propose inference based on a semi-parametric percentile-t bootstrap in which the upper tail is modelled parametrically by a Pareto distribution, and show using simulated data that accurate inference is achievable with moderately large samples. (For a related approach, see also Alfons et al., JRSS(A) 2011.) In this paper, we provide the first systematic application of the DF-CF inferential approach to real-world income data for multiple years (yearly, 1977-2018), i.e., the same survey data as used by the UK Office for National Statistics for official statistics on inequality. As part of this work, we extend the DF-CF approach to deal with weighted data and a range of inequality indices (Gini, Generalised Entropy family, percentile ratios, and top income shares). We confirm that inequality indices are more precisely estimated using the DF-CF approach rather than the conventional asymptotic approach. But according to our DF-CF estimates, we cannot reject the null hypothesis of no inequality difference between most pairs of years over the period 1977-2018 at conventional levels of statistical significance.

We study individual earnings responses to positive wealth shocks from inheri- tance, inter-vivos gifts, and lotteries. In a life-cycle model we show how responses may differ across the three types of shocks because they occur at different ages. In addition, gifts tend to be targeted, and socio-psychological circumstances differ between the different shocks. We explore these differences in a panel of tax records for a large Swiss canton. We find consistently negative earnings responses, irre- spective of the source of the wealth shock. The strongest responses are found for older workers – partly through early retirement –, and for women. Conditional on age, inheritance triggers weaker earnings responses than lottery winnings. Gifts are associated with the strongest reductions in subsequent earnings. However, strong pre-trends confirm them to be targeted and do not allow us to quantify the causal effect of inter-vivos giving. For instrumented gifts, however, no statistically significant earnings response is observed. This suggests that, when abstracting from targeting, behavioral effects mitigate labor supply reductions of donees.

While nouns in the German language are gendered toward males, the introduction of the "gender star" or "gender colon" have allowed for nouns to be interpreted as not assigning gender, or non-binary. Their usage however has become highly politically polarizing. Using over 40 million online job postings from 2016 to 2023, we document the rising prevalence of the gender star and colon in the German labour market, particularly in German counties with greater support for the Green party. We then study how jobseekers respond when the advertised job title includes such non-binary punctuation. Inclusive job ads receive more clicks and lead to more application starts. The positive effect is larger for the colon and holds when exploiting within firm and job title variation and looking at large companies with rapid increases over time. Finally, using a survey experiment, we investigate how such politically-charged signals in job ads affect sorting and labour market polarization.

Mounting research documents that wealth inequality strongly persists across generations. Inheritances and inter-vivo gifts from parents to children are key contributors to this persistence. Intergenerational transfers are yet not only made unequally between families. It has been shown that a substantial share of intergenerational transfers is also made unequally within families. In this study, we address this puzzle of unequal division and empirically investigate the distribution of intergenerational transfers through the lens of what we call the ‘principle of dynastic succession’. This principle states that intergenerational transfers are made such that the family and its wealth are carried on into the long-lasting future, leading to unequal division. Analyzing administrative data from the German inheritance and gift tax register (2007-2020), we argue that the principle is particularly salient in the presence of structuring assets (e.g. family business) and that its application varies along the estate distribution. Going beyond individual parent-child transactional relationships, the principle of dynastic succession allows to link intra-familial disparities to long-term persistence in overall wealth inequality more broadly. Thereby, it sheds light on a so far neglected mechanism through which the family generates inequalities both within and between generations.

Structural change often accelerates during economic downturns, but the behavioral responses that contribute to this process are not well understood. This paper shows how the selection of students into vocational programs changes in response to economic crisis. The context is the massive economic recession that hit Sweden in 1990, which disproportionally affected the manufacturing and construction sectors. Our analysis shows that students who directly experience the economic shock by experiencing paternal job loss in exposed sectors select into programs less exposed to the crisis. As a result, they achieve better labor market outcomes (higher employment rates and lifetime earnings) than students who chose their occupation before experiencing the crisis. In contrast, students are less responsive to aggregate conditions in their labor market. These results suggest that informational frictions are a key obstacle to structural adjustments on the labor market.

I study changes in selection into parenthood after the introduction of a large universal child benefit in Poland. The patterns of selection have changed significantly and persistently, as positive selection on education has weakened and negative selection on income has strengthened. The gap in birth rates between low-income and high-income couples exceeded 50%, in a stark contrast to zero gaps in the pre-introduction period. In a microsimulation approach, I combine the birth rate changes and existing estimates of the labor supply effects of the transfer to study the impact of these adjustments on poverty reduction associated with the transfer. The negative supply responses reduced the extent of poverty reduction by 27% and fertility adjustments further reduced poverty reduction by 5%.

What are the societal consequences of economic inequality, and how do concerns for these consequences affect individuals' redistributive preferences? This paper examines beliefs about how economic inequality changes society, and establishes a causal link between such inequality externality beliefs and redistributive preferences. Using two representative surveys of a combined 6,731 U.S. citizens, we show that a majority of respondents believe that inequality leads to negative societal outcomes through channels such as increased crime, deteriorating democratic institutions, and diminished economic growth. We establish a causal link from individuals' inequality externality beliefs to their redistributive preferences by using exogenously provided video information treatments. With this and other methods we estimate that inequality externality beliefs are about two-thirds as impactful for individuals' redistributive preferences as broad economic fairness views. Although Democrats are more likely to believe in the negative consequences of inequality than Republicans, beliefs are surprisingly similar across political parties and less polarized than comparable fairness views. Inequality externality-based arguments cause less anger among respondents than fairness-based arguments, however, indicating structural differences in the two types of arguments.

The rise of populist politics has highlighted the increasingly polarized geography of prosperity, and the rise of national income inequalities has been increasingly connected to the evolution of spatial inequalities within countries. Whilst crossnational research on income inequalities has been highly influential, there is limited comparative research into geographic income inequalities that tracks the link over time between national and subnational economic inequality. This paper is a first systematic attempt to create internationally comparable evidence showing how different countries perform in terms of geographic inequalities. We create cross-country comparable measures of spatial wage disparities between and within similarly-defined local labour market areas (LLMAs) for Canada, France, Germany, the United Kingdom and the United States since the 1970s, and assess their contribution to national inequality. By the end of the 2010s, spatial inequalities in LLMA mean wages are very similar in Canada, France, Germany and the UK. The US is the most spatially unequal; Canada has US levels of national inequality with European spatial inequality; France has very low spatial inequality in top and bottom wages; place is unusually important in the UK; and place makes a low and stable contribution to German inequality. All countries experienced an increase in spatial inequality over the period, though the degree of increase varies considerably. The contribution of inequalities between places in explaining national wage inequality has remained fairly constant over the 40-year study period, except in the United Kingdom. Whilst common social, economic and technological shocks are clearly important, the variation in levels and trends of spatial inequality across countries and over time opens the door to comparative research exploring the role of national institutions in mediating how these shocks translate into economic disparities between places.

This study examines how inheritance and gift tax systems may reproduce gender inequalities in parental transfers. Although there is ample research on the role of fiscal policy for wealth inequality between households, we know only little about how taxes shape gender wealth inequality. We focus on financial transfers because a significant share of wealth is not generated from savings but received in transfers. Gender differences in financial transfers might arise or be reproduced if men benefit differently than women from tax exemptions. This could be because men and women receive different types of assets where some are tax-exempted while others are not. To estimate gender gaps in the effective tax rates on parental transfers, we draw on German administrative inheritance and gift tax data. We show that men’s average effective tax rate on inheritance is 2% lower than women’s. For gifts, men’s average effective tax rate is 18% lower than women’s. By discussing and identifying implicit gender discrimination in the inheritance and gift tax system this study adds another factor – tax policy – to the debate about the gender wealth gap.

To assess gender equality in society, it is important to understand how parenthood affects women relative to men. Labor economics has established that women still experience a child penalty in earnings. It is unclear to what degree gender inequality due to childbearing extends beyond the labor market and affects well-being. We combine administrative data from Austria and Denmark with a quasi-experimental event study approach to estimate the impact of the birth of their first child on parents' mental health. We find that mental health deteriorates for both parents after birth, but this effect is much more pronounced for women than for men. The motherhood penalty in mental health is stronger in Austria compared to Denmark. Longer periods of maternal leave exacerbate mental problems.

The baby boomer generation in Britain has accumulated substantial wealth through housing and private pension wealth during the 1990s and 2000s. However, the circumstances for the younger generation in Britain are expected to differ due to considerably less favourable and highly uncertain economic and political environment in the late 2000s and 2010s. Moreover, several studies have pointed to an increasing economic inequality within the younger generation, as their socio-economic outcomes are closely linked to their parents' wealth and social capital. Motivated by this observation, this study questions how Britain's younger adults aged between 25 and 45 accumulate wealth, and whether social origin plays a role in the manner and extent of younger adults' wealth-building. To answer these questions, the study develops a typology of savers and examines whether the initial saver type membership as well as patterns of transitions across the saver types over time differ by parental homeownership.

To establish saver types, it takes a Balance Sheet approach, which distinguishes asset- and debt-holding, and different types of wealth-building vehicles by factors such as risk structure, accessibility and ease of liquidation as well as amounts held in each vehicle, in order to provide nuanced picture of wealth accumulation. Individual balance sheet is built using Wealth and Assets Survey, which is a biennial study on economic circumstances of British households since 2006/8. Factor Mixture Modelling is used to establish saver types, which takes both ownership and amounts held in a certain type of wealth building vehicle into account. Transitions probabilities between 2008/10 and 2014/16 are examined using Latent Transition Analysis. The characteristics associated with a specific saver type at the initial stage and transitions probabilities over time are examined using Latent Transition Analysis in the multi-group analysis framework comparing two groups distinguished by parental homeownership.

Four distinctive saver types are established: undersavers, property saver-dissavers, traditional savers and investor savers in the order of least wealthy to most wealthy group. The dominant wealth portfolio within these saver types shows that their abilities to deal with adverse effect differ substantially. The chances of being allocated to wealthier saver types are closely linked to individuals' socio-economic characteristics as well as parental homeownership. Although transition probabilities are relatively stable given a short observation period, upwards movement is more frequent among those who grew up with home-owning parents, controlling for other variables. This study's findings show how the younger generation's abilities to build wealth may differ at the earlier stage of life. Also, the findings of this study concur with the previous studies that the younger generation's economic outcomes are increasingly connected to their parents', which has substantial policy implications for inequality.