Intergenerational Occupational Mobility in a Rural Economy

Abstract

This paper presents evidence on intergenerational occupational mobility from agricul- ture to the nonfarm sector using survey data from Nepal. In the absence of credible instru- ments, the degree of selection on observables is used as a guide to the degree of selection on unobservablesla Altonji et. al. (2005) to address the unobserved genetic correlations relevant for occupation choice. The results show that a moderate ability correlation can easily explain away the observed partial correlation in non-farm participation between the father and a son. In contrast, the partial correlation in occupation choice between mother and daughter is much stronger, and is unlikely to be driven by genetic correlations alone. The results suggest that mother's nonfarm participation plays a causal role in daughter's choice of nonfarm occupation, possibly because of \cultural inheritance through role model and learning efiects, and transfer of reputation and social capital.