Extracting the causal component from the intergenerational correlation in unemployment

This paper examines the intergenerational correlation in unemployment in Norway and discusses and estimates two approaches for extracting the causal component: sibling differences and the use of parental unemployment occurring after the child’s outcome as control for the unobserved family heterogeneity. Confirming existing evidence, I find a substantial intergenerational correlation in unemployment. Almost half of this is due to observed family heterogeneity. The causal effect is found to be statistically insignificant by both identification strategies, but while the estimated effect is negative on the sample made for the sibling-difference approach, this finding is not replicated on a less selective sample.