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Parental Background and Earnings: German Evidence on Direct and Indirect Relationships

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  • Cornelissen Thomas

    (Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät, Institut für Empirische Wirtschaftsforschung, Königsworther Platz 1, 30167 Hannover, Germany)

  • Jirjahn Uwe

    (Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät, Institut für Arbeitsökonomik, Königsworther Platz 1, 30167 Hannover, Germany)

  • Tsertsvadze Georgi

    (Feri Rating & Research AG, Rathausplatz 8 - 10, 61348 Bad Homburg, Germany)

Abstract

Using data from the German Socioeconomic Panel (GSOEP), the study analyzes the direct and indirect effects of parental background on employees' earnings. To examine indirect effects we estimate the determinants of the employees' years of schooling. In a second step, we run wage regressions to examine direct effects. Our results suggest that the direct and indirect effects of parental background driving the intergenerational correlation of socioeconomic status are complex. It is not only important to differentiate between mother's and father's education. It is also important to take into account other parental characteristics such as maternal labor force participation and the parents' occupational status and fertility. Moreover, we find that interaction effects play an important role. The returns to schooling depend on the employees' parental background.

Suggested Citation

  • Cornelissen Thomas & Jirjahn Uwe & Tsertsvadze Georgi, 2008. "Parental Background and Earnings: German Evidence on Direct and Indirect Relationships," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(5-6), pages 554-572, October.
    • Handle: RePEc:jns:jbstat:v:228:y:2008:i:5-6:p:554-572
    DOI: 10.1515/jbnst-2008-5-609
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    Cited by:

    1. Uwe Jirjahn, 2011. "Gender, Worker Representation and the Profitability of Firms in Germany," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(2), pages 281-298, December.
    2. Silvia Avram & Olga Canto, 2016. "Labour outcomes and family background: Evidence from the EU during the recession," Working Papers 414, ECINEQ, Society for the Study of Economic Inequality.
    3. Guido Baldi, 2013. "Physical And Human Capital Accumulation And The Evolution Of Income And Inequality," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(3), pages 57-83, September.
    4. Schank Thorsten & Schnabel Claus & Stephani Jens, 2009. "Geringverdiener: Wem und wie gelingt der Aufstieg? / Low-Wage Earners: Who Manages to Reach Higher Wage Levels?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(5), pages 584-614, October.
    5. Krenz, Astrid, 2010. "La distinction reloaded: Returns to education, family background, cultural and social capital in Germany," University of Göttingen Working Papers in Economics 108, University of Goettingen, Department of Economics.
    6. Scharfenkamp Katrin, 2016. "It’s About Connections – How the Economic Network of the German Federal Government Affects the Top Earners’ Average Income Tax Rate," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(4), pages 427-453, August.
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