Family Background, Educational Qualifications and Meritocratic Labor Market Allocation: Evidence from Danish Siblings

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This paper looks at how education and family background shapes the occupation and earnings of a generation of Danes, and concludes that education plays a powerful role in explaining why children from advantaged backgrounds have higher earnings than chil-dren from disadvantaged backgrounds.

The researchers studied all children born in Denmark between 1965 and 1971 and who had siblings born in that time – a total of just over 200,000. They analysed their career outcomes of the siblings at age 44 – as they had the same background, it would be pos-sible to see clearly what difference their educational achievement had made.

The paper shows that for those with the same educational qualifications the system ap-pears to be almost totally meritocratic – that is, 90 per cent of occupational difference could be explained by fine-grained differences in educational attainment. However, this held true more strongly for men than for women.

When it came to differences in earnings, the effect was still present though less strong – around 75 per cent could be explained by educational achievement.

The authors suggest that those from privileged backgrounds may gain an income ad-vantage over those with similar qualifications from less privileged backgrounds through social networks which enable them to gain entry to high-paying professions – rather than being paid more once they have done so. They also suggest those with privilege may have learned skills and techniques in the family which enable them to be more produc-tive in the workplace.