Informal employment inheritance: The role of father's occupation in children's occupational status
|Day:||Tue 2 Jul|
According to the National Labour Force Survey data, the informal jobs in Indonesia still make up more than half of the total jobs. This fact suggests the importance of informal jobs in Indonesian labour market. One apparent issue regarding the informal jobs in Indonesia is the existence of informal jobs persistence across generation due to employment inheritance that relates parent, especially the father, and children when it comes to occupational decision. This paper examines this issue by utilizing the panel data from the Indonesian Family Life Survey (IFLS) year 2007 and 2014. Our main focus is to examine whether the employment status of a father affects his children employment status by applying the multinomial logit model and correcting for potential bias due to sample selection. Our finding confirms the presence of intergenerational employment heritance for both formal and informal jobs by which children tend to follow their parent’s job status, particularly their father’s. However, the evidence is more pronounced for the informal jobs than that of the formal jobs, indicating the so-called informal employment inheritance. We also found that a child’s education has a negative effect on informal employment inheritance and has a positive impact on formal employment inheritance, while fathers’ education only has a positive impact on formal employment inheritance. This finding suggests that improvement in education could increase labour force participation in formal jobs. Lastly, the results show that the higher the economic status of a household the higher the probability that formal employment inheritance would exist.