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Structural Estimates of the Intergenerational Education Correlation

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Author Info
Belzil, Christian () (Centre National de Recherche Scientifique, University of Lyon 2, CIRANO, CIREQ and IZA Bonn)
Hansen, Jörgen (Concordia University, CIRANO, CIREQ and IZA Bonn)

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Abstract

Using a structural dynamic programming model, we investigate the relative importance of family background variables and individual specific abilities in explaining cross-sectional differences in schooling attainments and wages. Given scholastic ability, household background variables (especially parents' education) account for 68% of the explained crosssectional variations in schooling attainments. When the effects of household background variables on ability are also taken into account, the percentage raises to 85%. However, individual differences in wages are mostly explained by abilities. Only 27% of the explained variation in wages is accounted for by parents’ background variables as opposed to 73% by unobserved abilities (orthogonal to family background variables). When scholastic ability is correlated with family background variables, ability endowments explain as much as 81% of individual wages.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 973.

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Length: 29 pages
Date of creation: Dec 2003
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Handle: RePEc:iza:izadps:dp973

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Related research
Keywords: intergenerational education correlation endogenous schooling household characteristics dynamic programming

Find related papers by JEL classification:
J2 - Labor and Demographic Economics - - Demand and Supply of Labor
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Christian Belzil & Marco Leonardi, 2006. "Can Risk Aversion Explain Schooling Attainments? Evidence From Italy," Working Papers 0607, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
    Other versions:
  2. Christian Belzil, 2006. "Testing the Specification of the Mincer Wage Equation," Post-Print halshs-00142542_v1, HAL. [Downloadable!]
    Other versions:
  3. Bauer, Philipp & Riphahn, Regina T., 2004. "Heterogeneity in the Intergenerational Transmission of Educational Attainment: Evidence from Switzerland on Natives and Second Generation Immigrants," IZA Discussion Papers 1354, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Christian Belzil, 2006. "The Return to Schooling in Structural Dynamic Models: A Survey," IZA Discussion Papers 2370, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. James McIntosh & Martin Munk, 2007. "Scholastic ability vs family background in educational success: evidence from Danish sample survey data," Journal of Population Economics, Springer, vol. 20(1), pages 101-120, February. [Downloadable!] (restricted)
  6. Martin Kahanec, 2007. "Ethnic Specialization and Earnings Inequality: Why Being a Minority Hurts but Being a Big Minority Hurts More," IZA Discussion Papers 2650, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Christian Belzil & Jörgen Hansen, 2004. "A Structural Analysis of the Correlated Random Coefficient Wage Regression Model," Working Papers 0405, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
    Other versions:
  8. Nikos Benos, . "Education Systems, Growth and Welfare," University of Cyprus Working Papers in Economics 5-2005, University of Cyprus Department of Economics. [Downloadable!]
  9. Philipp Bauer & Regina Riphahn, 2006. "Education and its intergenerational transmission: country of origin-specific evidence for natives and immigrants from Switzerland," Portuguese Economic Journal, Springer, vol. 5(2), pages 89-110, August. [Downloadable!] (restricted)
  10. Christian Belzil & Jörgen Hansen, 2005. "A Structural Analysis of the Correlated Random Coefficient Wage Regression Model with an Application to the OLS-IV Puzzle," IZA Discussion Papers 1585, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Frenette, Marc, 2005. "Is Post-secondary Access More Equitable in Canada or the United States?," Analytical Studies Branch Research Paper Series 2005244e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
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