A study of 44,500 U.S. twin pairs suggests that inherited genetic factors account for roughly one-third of the differences in earnings among steadily employed Americans in their late 20s and 30s. The research, published in PNAS, also indicates that conventional twin studies may overestimate genetic influences on career outcomes when twins share workplaces.

Researchers David Card and Jesse Rothstein of the University of California, Berkeley, and Moises Yi of the U.S. Census Bureau linked 2000 Census household records with quarterly wage data from state unemployment insurance filings. The analysis covered formal wage and salary employment from 2018 through the first quarter of 2023, excluding the final three quarters of 2020 because of pandemic-related labor market disruption.

The broader employment sample included 87,000 twin pairs and 2.168 million non-twin sibling pairs. For the detailed wage analysis, the researchers focused on pairs in which both siblings maintained stable full-time employment, producing a sample of 44,500 twin pairs and 1.007 million non-twin sibling pairs.

The researchers estimated that genetic factors explained 36% of the variation in overall earnings before accounting for twins and siblings who had worked at the same establishment. After excluding those pairs, the estimate fell to 31%, which the authors considered their best estimate. The adjusted figure describes differences across the population, not the share of any individual person's paycheck that is determined by genes.

The study also separated earnings into a portable worker component and an employer pay premium. Before the workplace adjustment, the estimated heritability was 40% for individual earning power and 21% for employer pay premiums. The estimated heritability of having any employment was 23%, while the estimate for the number of quarters employed was 32%.

Same-sex twins were much more likely than other sibling groups to work at the same establishment. Employment records showed that 11.4% of same-sex twin pairs had worked at the same establishment at some point between 2018 and 2023, compared with 5.7% of same-sex non-twin siblings, 3.8% of opposite-sex twins and 2.2% of opposite-sex non-twin siblings.

Removing pairs who had shared an establishment reduced the estimated heritability of employer pay premiums from 21% to 7%, a result that was no longer statistically significant. The estimate for industry pay premiums fell from 26% to 12%, while the workplace-specific component dropped from 20% to essentially zero. The estimate for portable individual earning power declined from 40% to 35%.

Because administrative records do not identify whether twins are identical or fraternal, the researchers used biological sex in their statistical analysis. Opposite-sex twins are fraternal, while same-sex pairs include both identical and fraternal twins. The study estimated that identical twins represented 58.7% of same-sex pairs.

The authors used a difference-in-differences approach to account for the possibility that families treat sons and daughters differently. They also considered how earnings are shaped by employers, industries and geographic areas, rather than attributing all pay differences to individual skills or characteristics.

Felix Bittmann, a researcher at the Leibniz Institute for Educational Trajectories and the University of Bamberg who was not involved in the study, said the findings show that estimated heritability is present but depends substantially on whether twins work for the same firms. He also noted that social interactions can influence results even in carefully designed genetically informed studies.

The researchers caution that the estimates have several limitations. The wage analysis included only sibling pairs in stable full-time wage and salary jobs, excluding self-employed workers, federal employees and adults with limited labor-market participation. Assortative mating could also make the estimates higher than reported, while unmeasured interactions between twins, such as shared education choices or college attendance, could continue to inflate them.

The study's authors said the findings may help explain why twin studies often produce higher estimates of heritability for social outcomes than analyses based directly on DNA. Their paper, titled “Heritability and social interaction in labor market outcomes: Evidence from the population of twins in the United States,” was authored by Card, Rothstein and Yi.

Sources: PsyPost.