Parental family income and the socioeconomic attainment of children (original) (raw)
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Review of Income and Wealth, 1990
Intergenerational correlations between parental income and child earnings reflect the extent of intergenerational economic mobility and equality of opportunity. Previous estimates are about 0.2, but these estimates suffer from a number of problems, iilcluding the use of but one year of observations and of nonrandom samples. We present new estimates based on the Panel Study of Income Dynamics. These estimates suggest correlations over 0.5 with longer-run income and earning measures, as well. as some gender and race differences and some impact of liquidity constraints. They also suggest that the intergenerationai . , ,$ticity is greater as parental income increases, the opposite of the Becker-Tomes conjecture.
Family Structure and Economic Success Across the Life Course
Marriage & Family Review, 2017
This paper examines the role that family structure plays in long-run economic outcomes across the life course. Using nearly 30 years of data from the National Longitudinal Survey of Youth 1979, we find that youths who grow up with both biological parents earn more income, work more hours each week and are more likely to be married themselves as adults, compared to children raised in single-parent families. Many of these differences continue to be statistically significant even after we control for family income experienced as an adolescent. In addition, the implied size of the income transfer that children growing up with a single parent to equalize lifetime economic outcomes would need-about $42,000-is markedly larger than the income transfers now available to families in USA.
Changing roles of parental economic resources in children's educational attainment
We investigate whether the relationship between parents' economic resources and children's educational attainment has changed over time by comparing two cohorts from the Panel Study of Income Dynamics. We examine multiple measures of economic resources, including income, net worth, liquid assets, and homeownership. We employ probit regressions and Chow tests in multivariate analyses. Results show that the associations between parents' liquid assets and college attendance became significantly stronger among the later cohort, suggesting the increasing importance of liquid assets. Of particular interest is a change in the role of negative liquid assets (unsecured debt exceeding savings) in high school graduation: among the earlier cohort there was no difference in likelihood of graduation between students whose families had negative liquid assets and those from families with zero liquid assets, but among the later cohort students from families with negative liquid assets were more likely to graduate. Results demonstrate the importance of employing diverse measures of economic resources in studying educational mobility. We may need to consider saving incentives and expansion of credit market access among families with few economic resources to improve educational outcomes.
The impact of parental earnings and education on the schooling of children
This paper addresses the intergenerational transmission of education and investigates the extent to which early school leaving (at age 16) may be due to variations in parental background. An important contribution of the paper is to distinguish between the causal effects of parental income and parental education levels. Least squares estimation reveals conventional results-weak effects of income (when the child is 16), stronger effects of maternal education than paternal, and stronger effects on sons than daughters. We find that the education effects remain significant even when household income is included. However, when we use instrumental variable methods to simultaneously account for the endogeneity of parental education and paternal income, only maternal education remains significant (for daughters only) and becomes stronger. These estimates are consistent across various sets of instruments. The impact of paternal income varies between specifications but becomes insignificant in our favored specifications. Our results provide only limited support for policies that alleviate income constraints at age 16 in order to alter schooling decisions. In contrast, our results do suggest that policies which increase permanent income would lead to increased participation (especially for daughters).
Social Forces
Using data on fifteen countries based on the harmonization of IALS and PIAC data, we provide a cross-national analysis of the evolution of the role of educational attainment and cognitive skills as mediators of intergenerational inequalities between 1994 and 2015. We find that the association between parents’ education and children’s earnings is large and highly stable over time in most countries, except for Scandinavian countries, where we detect a downward trend. Conversely, the United States stands out as the country displaying the largest earning differentials by parents’ education and as the only country where these differentials increased over time. We demonstrate that educational attainment and skills contributed in different ways to the persistence of these intergenerational inequalities. On the one hand, educational equalization was compensated by increasing earning returns to education in several countries. On the other hand, the association between parents’ education and ...
The Impact of Parental Income and Education on the Schooling of Their Children
The Impact of Parental Income and Education on the Schooling of Their Children * This paper addresses the intergeneration transmission of education and investigates the extent to which early school leaving (at age 16) may be due to variations in permanent income, parental education levels, and shocks to income at this age. Least squares estimation reveals conventional results -stronger effects of maternal education than paternal, and stronger effects on sons than daughters. We find that the education effects remain significant even when household income is included. Moreover, decomposing the income when the child is 16 between a permanent component and shocks to income at age 16 only the latter is significant. It would appear that education is an important input even when we control for permanent income but that credit constraints at age 16 are also influential. However, when we use instrumental variable methods to simultaneously account for the endogeneity of parental education and paternal income, we find that the strong effects of parental education become insignificant and permanent income matters much more, while the effects of shocks to household income at 16 remain important. A similar pattern of results are reflected in the main measure of scholastic achievement at age 16. These findings have important implications for the design of policies aimed at encouraging pupils to remain in school longer.
Equal opportunity for all? Parental economic resources and children's educational attainment
Children and Youth Services Review, 2009
We investigate the roles of parents' economic resources in children's educational attainment and test the liquidity constraint hypothesis. Using data from the Panel Study of Income Dynamics, we find that parents' liquid assets have significantly positive associations with years of schooling, high school graduation, and college attendance. We find that the relationship between liquid assets and education is non-linear: children from negative liquid asset households have a higher chance of finishing high school but a lower chance of graduating college than those from zero liquid asset households. Results suggest that we should consider assets when seeking to understand educational mobility.
Parents' Incomes and Children's Outcomes: A Quasi-Experiment
Social Science Research Network, 2008
Parents' Incomes and Children's Outcomes: A Quasi-Experiment * Identifying the effect of parental incomes on child outcomes is difficult due to the correlation of unobserved ability, education levels and income. Previous research has relied on the use of instrumental variables to identify the effect of a change in household income on the young adult outcomes of the household's children. In this research, we examine the role that an exogenous increase in household incomes due to a government transfer unrelated to household characteristics plays in the long run outcomes for children in affected households. We find that children who are in households affected by the cash transfer program have higher levels of education in their young adulthood and a lower incidence of criminality for minor offenses. These effects differ by initial household poverty status as is expected. Second, we explore two possible mechanisms through which this exogenous increase in household income affects the long run outcomes of children-parental time (quantity) and parental quality. Parental quality and child interactions show a marked improvement while changes in parental time with child does not appear to matter.
The Changing Role of Family Income and Ability in Determining Educational Achievement
2007
This paper uses data from the 1979 and 1997 National Longitudinal Survey of Youth cohorts (NLSY79 and NLSY97) to estimate changes in the effects of ability and family income on educational attainment for youth in their late teens during the early 1980s and early 2000s. Cognitive ability plays an important role in determining educational outcomes for both NLSY cohorts, while family income plays little role in determining high school completion in either cohort. Most interestingly, we document a dramatic increase in the effects of family income on college attendance (particularly among the least able) from the NLSY79 to the NLSY97. Family income has also become a much more important determinant of college 'quality' and hours/weeks worked during the academic year (the latter among the most able) in the NLSY97. Family income has little effect on college delay in either sample. To interpret our empirical findings on college attendance, we develop an educational choice model that incorporates both borrowing constraints and a 'consumption' value of schooling-two of the most commonly invoked explanations for a positive family income-schooling relationship. Without borrowing constraints, the model cannot explain the rising effects of family income on college attendance in response to the sharply rising costs and returns to college experienced from the early 1980s to early 2000s: the incentives created by a 'consumption' value of schooling imply that income should have become less important over time (or even negatively related to attendance). Instead, the data are more broadly consistent with the hypothesis that more youth are borrowing constrained today than were in the early 1980s.