Nepotism vs specific skills : the effect of professional liberalization on returns to parental back grounds of italian lawyers

We study the mechanisms of intergenerational inequality among Italian lawyers over the period 1994- 2014 using a longitudinal dataset that combines administrative and survey data. We first estimate a 17.5% earnings premium for a law family background within the group of lawyers, so conditional on entering the profession. We then exploit the 2003-2006 liberalization process, which asymmetrically affected the two main transmission mechanisms: skill transfer and nepotism. We find that liberalization squeezed the law background return by at least 3/5, thus revealing a high incidence of nepotism. The bulk of the reduction occurred for the youngest lawyers and the top earners. KEY