Knocking on Parents’ Doors

Abstract

We study the effect of regulation on intergenerational mobility exploiting the impact of two reforms occurred in Italy since the 2000s. We built an OECD-style indicator of strictness of regulation for 14 occupations and three cohorts (that is, before and after each reform) to leverage the effect of regulation among occupations and over time. We find that relaxation of regulation has affected the propensity to follow the parents’ career, which is our proxy for occupational persistence. The impact is driven by variation of anticompetitive conduct rules rather than entry requirements. Regulation distorts the career choices significantly more among less able children.