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Industrial Composition and Intergenerational Mobility

For five decades, the share of adults employed in college-degree-intensive industries, such as health care and education, has been rising. Industries that provided employment for workers without degrees, especially manufacturing, have been reducing their payrolls. This economic transition could impact the probability of children obtaining higher levels of education than their parents achieved. In this analysis, measures of the local industrial composition from the Current Population Survey are merged with the National Longitudinal Surveys of Youth using the confidential geo-coded records. Living in a labor market with a higher share of adults employed in degree-intensive industries is positively associated with obtaining a college degree among youth whose parents do not have a degree. An additional standard deviation difference in the share of employment in degreeintensive industries corresponds to a 0.02 increase in the probability of ascending to being a college graduate, from a mean of 0.23. For cohorts born in the 1960s, living in a manufacturing-intensive region was negatively correlated with college attainment, but the relationship becomes positive among more recent cohorts. Alternate specifications introduce measures of several factors that could relate the industrial composition to educational attainment, including returns to education (wage premiums), opportunity costs (youth employment), parental inputs (family structure, income), community resources (per capita income), information (regional education levels, post-secondary student populations), and networks (parent’s employment).

Keywords: Industrial Composition, Intergenerational Mobility, Educational Attainment

JEL Codes: E24, J24, O14, R11.

Suggested citation: Whitaker, Stephan, 2015. “Industrial Composition and Intergenerational Mobility,” Federal Reserve Bank of Cleveland, Working Paper no. 15-33.

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