Family Background, Race and Labor Market Inequality

For decades, social scientists have relied on sibling correlations as indicative of the effect of “global family background” on socioeconomic status. This study advances this line of inquiry by drawing on data from the Panel Study of Income Dynamics to analyze racial differences in siblings' labor market and socioeconomic outcomes. We find that African Americans have lower sibling correlations in labor market earnings and family income than whites. Across the life course, African American siblings move toward greater resemblance than whites. These findings suggest that the effect of family background on socioeconomic outcomes is weaker for African Americans than for whites. Volatility in earlier career stages may suppress the effect of family background on labor market outcomes, and this dynamic is especially pronounced for African Americans who lack resources to insulate themselves from volatile events.