System Working Paper 17-07
Published March 30, 2017
Can shocks to one generation propagate to the next? To answer this question, we study how the Vietnam draft lottery affected the next generation’s labor market. Using the universe of U.S. federal tax returns, we link fathers from draft cohorts to their sons’ outcomes and find that sons of fathers randomly called by the draft 1) have lower earnings and labor force participation than their peers, and 2) are more likely to volunteer for military service. These findings highlight the strong role family plays in human capital development and occupational choice. More generally, our results provide sound evidence that malleable aspects of a parent’s life course can influence children’s labor market outcomes and that policies that only directly alter the circumstances of one generation can have important long-run effects on the next.