Like Father, Like Son: Labor Market Networks and Social Mobility

• Authors: Matthew O. Jackson.
• BSE Working Paper: 112240 | September 15
• Keywords: human capital , Networks , labor markets , Social Mobility
• JEL codes: A14, J64, J31, J70
• human capital
• Networks
• labor markets
• Social Mobility

We build a model where investments in human capital depend on the state of an individual’s social network. We show that correlation patterns between parents’ and children’s human capital investment and income depend on the structure of their social network. Heavier reliance on the social network increases the correlation of human capital investments and income across generations and decreases the efficiency of their investment decisions.