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The Impact of Parental Earnings and Education on the Schooling of Children

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Author Info

  • Arnaud Chevalier

    (Royal Holloway, University of London, IZA)

  • Colm Harmon

    (University College Dublin, Australian National University, IZA)

  • Vincent O'Sullivan

    (TILDA, Trinity College Dublin, The ESRI)

  • Ian Walker

    (Lancaster University Management School, IZA)

Abstract

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).

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Bibliographic Info

Paper provided by Geary Institute, University College Dublin in its series Working Papers with number 201112.

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Length: 42 pages
Date of creation: 29 Jun 2011
Date of revision:
Handle: RePEc:ucd:wpaper:2011/12

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Keywords: Early school leaving; intergenerational transmission;

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References

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  1. Jo Blanden & Paul Gregg, 2004. "Family Income and Educational Attainment: A Review of Approaches and Evidence for Britain," The Centre for Market and Public Organisation 04/101, Department of Economics, University of Bristol, UK.
  2. Björklund, Anders & Lindahl, Mikael & Plug, Erik, 2005. "The Origins of Intergenerational Associations: Lessons from Swedish Adoption Data," IZA Discussion Papers 1739, Institute for the Study of Labor (IZA).
  3. Arnaud Chevalier & Gauthier Lanot, 2002. "The Relative Effect of Family Characteristics and Financial Situation on Educational Achievement," Education Economics, Taylor & Francis Journals, vol. 10(2), pages 165-181.
  4. Haroon Chowdry & Claire Crawford & Lorraine Dearden & Alissa Goodman & Anna Vignoles, 2010. "Widening participation in higher education: analysis using linked administrative data," IFS Working Papers W10/04, Institute for Fiscal Studies.
  5. Arnaud Chevalier, 2004. "Parental Education and Childs Education: A Natural Experiment," CEE Discussion Papers 0040, Centre for the Economics of Education, LSE.
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  7. Arnaud Chevalier & Colm Harmon & Ian Walker & Yu Zhu, 2003. "Does education raise productivity, or just reflect it?," Working Papers 200304, School Of Economics, University College Dublin.
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