IDEAS home Printed from https://ideas.repec.org/a/jns/jbstat/v228y2008i5-6p554-572.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://www.degruyter.com/view/j/jbnst.2008.228.issue-5-6/jbnst-2008-5-609/jbnst-2008-5-609.xml?format=INT
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Flossmann Anton L. & Pohlmeier Winfried, 2006. "Causal Returns to Education: A Survey on Empirical Evidence for Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(1), pages 6-23, February.
    2. James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
    3. Katharina Wrohlich, 2008. "The excess demand for subsidized child care in Germany," Applied Economics, Taylor & Francis Journals, vol. 40(10), pages 1217-1228.
    4. Ichino, Andrea & Winter-Ebmer, Rudolf, 1999. "Lower and upper bounds of returns to schooling: An exercise in IV estimation with different instruments," European Economic Review, Elsevier, vol. 43(4-6), pages 889-901, April.
    5. Heineck Guido & Riphahn Regina T., 2009. "Intergenerational Transmission of Educational Attainment in Germany – The Last Five Decades," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(1), pages 36-60, February.
    6. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
    7. Hertz Tom & Jayasundera Tamara & Piraino Patrizio & Selcuk Sibel & Smith Nicole & Verashchagina Alina, 2008. "The Inheritance of Educational Inequality: International Comparisons and Fifty-Year Trends," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(2), pages 1-48, January.
    8. Antoni Calvó-Armengol & Matthew O. Jackson, 2004. "The Effects of Social Networks on Employment and Inequality," American Economic Review, American Economic Association, vol. 94(3), pages 426-454, June.
    9. Thomas Bauer & Ira Gang, 2001. "Sibling Rivalry in Educational Attainment: The German Case," LABOUR, CEIS, vol. 15(2), pages 237-255, June.
    10. Charlene Kalenkoski, 2008. "Parent-child bargaining, parental transfers, and the post-secondary education decision," Applied Economics, Taylor & Francis Journals, vol. 40(4), pages 413-436.
    11. Michael Gebel & Friedhelm Pfeiffer, 2010. "Educational Expansion and Its Heterogeneous Returns for Wage Workers," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 130(1), pages 19-42.
    12. Ruhm, Christopher J., 2008. "Maternal employment and adolescent development," Labour Economics, Elsevier, vol. 15(5), pages 958-983, October.
    13. Mason, Patrick, 2007. "Intergenerational mobility and interraical inequality:the return to family values," MPRA Paper 11327, University Library of Munich, Germany.
    14. Jo Blanden & Paul Gregg & Lindsey Macmillan, 2007. "Accounting for Intergenerational Income Persistence: Noncognitive Skills, Ability and Education," Economic Journal, Royal Economic Society, vol. 117(519), pages 43-60, March.
    15. Bauer, Thomas & Zimmermann, Klaus F, 1999. "Overtime Work and Overtime Compensation in Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(4), pages 419-436, September.
    16. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    17. Philip Oreopoulos & Marianne Page & Ann Huff Stevens, 2008. "The Intergenerational Effects of Worker Displacement," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 455-483, July.
    18. Eisenhauer, Philipp & Pfeiffer, Friedhelm, 2008. "Assessing intergenerational earnings persistence among German workers," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 119-137.
    19. Blackburn, McKinley L & Neumark, David, 1993. "Omitted-Ability Bias and the Increase in the Return to Schooling," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 521-544, July.
    20. Altonji, Joseph G & Dunn, Thomas A, 1996. "The Effects of Family Characteristics on the Return to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 692-704, November.
    21. repec:iab:iabzaf:v:41:i:2/3:p:119-137 is not listed on IDEAS
    22. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    23. Susanne James-Burdumy, 2005. "The Effect of Maternal Labor Force Participation on Child Development," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 177-211, January.
    24. Hanushek, Eric A, 1992. "The Trade-Off between Child Quantity and Quality," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 84-117, February.
    25. Gabriela Schütz & Heinrich W. Ursprung & Ludger Wößmann, 2008. "Education Policy and Equality of Opportunity," Kyklos, Wiley Blackwell, vol. 61(2), pages 279-308, May.
    26. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2004. "Tiebout Sorting, Social Multipliers and the Demand for School Quality," NBER Working Papers 10871, National Bureau of Economic Research, Inc.
    27. Cunha, Flavio & Heckman, James J. & Lochner, Lance, 2006. "Interpreting the Evidence on Life Cycle Skill Formation," Handbook of the Economics of Education, Elsevier.
    28. Dean R. Lillard, 2001. "Cross-National Estimates of the Intergenerational Mobility in Earnings," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 51-58.
    29. Schnabel, Reinhold & Schnabel, Isabel, 2002. "Family and gender still matter: the heterogeneity of returns to education in Germany," ZEW Discussion Papers 02-67, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    30. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-1189, December.
    31. Bowles, Samuel, 1972. "Schooling and Inequality from Generation to Generation," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 219-251, Part II, .
    32. Samuel Bowles & Herbert Gintis, 2002. "The Inheritance of Inequality," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 3-30, Summer.
    33. Tobias, J.L., 2000. "Are Return to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability-Earnings Relationship," Papers 00-01-12, California Irvine - School of Social Sciences.
    34. Corak, Miles, 2006. "Do Poor Children Become Poor Adults? Lessons from a Cross Country Comparison of Generational Earnings Mobility," IZA Discussion Papers 1993, Institute for the Study of Labor (IZA).
    35. Thomas A. Dunn & Kenneth A. Couch, 1999. "Intergenerational Correlations in Earnings in Three Countries: The United Kingdom, Germany and the United States," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 68(2), pages 290-296.
    36. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    37. Philipp Eisenhauer & Friedhelm Pfeiffer, 2008. "Assessing Intergenerational Earnings Persistence among German Workers," SOEPpapers on Multidisciplinary Panel Data Research 134, DIW Berlin, The German Socio-Economic Panel (SOEP).
    38. Bruce A. Weinberg, 2001. "An Incentive Model of the Effect of Parental Income on Children," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 266-280, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. 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.
    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," Center for European, Governance and Economic Development Research Discussion Papers 108, University of Goettingen, Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:228:y:2008:i:5-6:p:554-572. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: https://www.degruyter.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.