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Why the apple doesn't fall far: understanding intergenerational transmission of human capital

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  • Sandra E. Black
  • Paul Devereux
  • Kjell Salvanes

Abstract

Parents with higher education levels have children with higher education levels. However, is this because parental education actually changes the outcomes of children, suggesting an important spillover of education policies, or is it merely that more able individuals who have higher education also have more able children? This paper proposes to answer this question with a unique dataset from Norway. Using the reform of the education system that was implemented in different municipalities at different times in the 1960s as an instrument for parental education, we find little evidence of a causal relationship between parents? education and children?s education, despite significant OLS relationships. We find 2SLS estimates that are consistently lower than the OLS estimates, with the only statistically significant effect being a positive relationship between mother's education and son's education. These findings suggest that the high correlations between parents? and children?s education are due primarily to family characteristics and inherited ability and not education spillovers.

Suggested Citation

  • Sandra E. Black & Paul Devereux & Kjell Salvanes, 2004. "Why the apple doesn't fall far: understanding intergenerational transmission of human capital," Working Paper Series 2004-12, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:2004-12
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    More about this item

    Keywords

    Human capital; Education;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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