Knocking on parents’ doors: regulation and intergenerational mobility

Abstract

This paper studies the effect of regulation on intergenerational mobility. Focusing on the case of Italy since the early 2000s, we exploit the impact of two major reforms in the regulation of professional services. We built an OECD-style indicator of strictness of regulation for 14 occupations and three different cohorts (i.e., before and after each reform) to leverage the differential effect of regulation among occupations and over time. We find that the progressive liberalization of professional services has affected the propensity to follow the parents’ career, which is our proxy for intergenerational occupational persistence. The impact is driven by a relaxation of anti-competitive conduct rules rather than variation in entry requirements. Regulation distorts the career choices significantly more in social sciences, in provinces with higher rents for professionals and, at individual level, among less able children.