June 5, 2025
Modena, Italy
We study how genetic differences affect workers’ income trajectories by building a polygenic index predictive of educational attainment and using high-quality Finnish labor market history and education registers. While the income gap by genetics is small upon entering the labor market, it keeps widening up over the life cycle. Different channels can explain the differential income dynamics. We first show that the genetics gradient in income is absent in secondary and vocational tertiary education people. Next, we exploit the linked employer-employee data to show that transitioning to high-paying firms over their career allows tertiary-educated workers (but not lower educated ones) to express their genetic potential, which in turn leads to income inequality.