Elite Persistence in Family: The Role of Adoption in Prewar Japan

Why can elite families often maintain their social and economic status over multiple generations? We show that adoption can contribute to the persistence of elite status by utilizing a unique historical framework of prewar Japan. However, the preference for adoptive heirs may lead to selection bias in the process of choosing heirs, potentially biasing OLS results negatively. To address this selection bias, we use the gender of the firstborn child as an instrument for the adoption decision. We find that having an adoptive heir increases the probability of maintaining elite status in the son’s generation by 20.6% compared to having a biological heir. Furthermore, we show that this result is driven by matching high-quality adopted sons with fathers who were highly successful in their early lives.