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Educational Choice, Families, and Young People's Earnings

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  • John Ermisch
  • Marco Francesconi

Abstract

This paper presents two optimizing models of educational choice, discusses issues of identification, estimates earnings equations in the context of these models, and presents conditions under which we can test one against the other. The estimates indicate that education is endogenous for young people's earnings, creating a downward bias in estimated returns from education that assume exogeneity. Identification and estimation relies on family background information from a special sample from the British Household Panel Study 1991-95, which matches mothers and their young adult children. Our estimates favor a family model over an individual model, and they suggest that parents allocate resources to education to compensate for differences in their children's earnings endowments.

Suggested Citation

  • John Ermisch & Marco Francesconi, 2000. "Educational Choice, Families, and Young People's Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 35(1), pages 143-176.
    • Handle: RePEc:uwp:jhriss:v:35:y:2000:i:1:p:143-176
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    Cited by:

    1. Salm, Martin & Schunk, Daniel, 2008. "The Role of Childhood Health for the Intergenerational Transmission of Human Capital: Evidence from Administrative Data," IZA Discussion Papers 3646, Institute of Labor Economics (IZA).
    2. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2010. "Small Family, Smart Family? Family Size and the IQ Scores of Young Men," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
    3. Bratti, Massimiliano & Mendola, Mariapia, 2014. "Parental health and child schooling," Journal of Health Economics, Elsevier, vol. 35(C), pages 94-108.
    4. Cheti Nicoletti & Birgitta Rabe, 2019. "Sibling spillover effects in school achievement," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 34(4), pages 482-501, June.
    5. Pronzato, Chiara, 2008. "Why educated mothers don’t make educated children? A statistical study in the intergenerational transmission of schooling," ISER Working Paper Series 2008-11, Institute for Social and Economic Research.
    6. Ahlfeldt, Gabriel M. & Maennig, Wolfgang & Mueller, Steffen Q., 2022. "The generation gap in direct democracy: Age vs. cohort effects," European Journal of Political Economy, Elsevier, vol. 72(C).
    7. Erik Plug & Wim Vijverberg, 2003. "Schooling, Family Background, and Adoption: Is It Nature or Is It Nurture?," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 611-641, June.
    8. Massimiliano BRATTI, 2002. "Parents' Current Income, Long-term Characteristics and Children's Education: Evidence from the 1970 British Cohort," Working Papers 174, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    9. Jorge García Hombrados, 2017. "Cognitive Skills and Intra-Household Allocation of Schooling," Working Paper Series 1817, Department of Economics, University of Sussex Business School.
    10. Alison L. Booth & Mark L. Bryan, 2004. "The Union Membership Wage-Premium Puzzle: Is There a Free Rider Problem?," ILR Review, Cornell University, ILR School, vol. 57(3), pages 402-421, April.
    11. Banerjee, Abhijit V., 2004. "Educational policy and the economics of the family," Journal of Development Economics, Elsevier, vol. 74(1), pages 3-32, June.
    12. Christine Barnet-Verzat & François-Charles Wolff, 2003. "Choix d'éducation et composition par sexe de la fratrie," Economie & Prévision, La Documentation Française, vol. 157(1), pages 97-118.
    13. Ximena V. Del Carpio & Karen Macours, 2010. "Leveling the intra-household playing field: compensation and specialization in child labor allocation," Research in Labor Economics, in: Child Labor and the Transition between School and Work, pages 259-295, Emerald Group Publishing Limited.
    14. Arnaud Chevalier & Gavan Conlon, 2003. "Does it pay to attend a prestigious university?," CEE Discussion Papers 0033, Centre for the Economics of Education, LSE.
    15. Janet Currie & Mark Stabile & Phongsack Manivong & Leslie L. Roos, 2010. "Child Health and Young Adult Outcomes," Journal of Human Resources, University of Wisconsin Press, vol. 45(3).
    16. Marco Francesconi & Holly Sutherland & Francesca Zantomio, 2011. "A comparison of earnings measures from longitudinal and cross‐sectional surveys: evidence from the UK," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 174(2), pages 297-326, April.
    17. Lucia Coppola, 2004. "Education and Union Formation as Simultaneous in Italy and Spain," European Journal of Population, Springer;European Association for Population Studies, vol. 20(3), pages 219-250, September.
    18. Francesconi, Marco & Brynin, Malcolm, 2002. "The material returns to partnership: the effects of educational matching on labour market outcomes and gender equality," ISER Working Paper Series 2002-23, Institute for Social and Economic Research.
    19. Massimiliano Bratti & Mendola, M., 2013. "GINI DP 63: Parental Health and Child Schooling!," GINI Discussion Papers 63, AIAS, Amsterdam Institute for Advanced Labour Studies.
    20. Brandon J. Restrepo, 2016. "Parental investment responses to a low birth weight outcome: who compensates and who reinforces?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(4), pages 969-989, October.
    21. Janet Currie, 2009. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 87-122, March.
    22. Anh T. Le & Paul W. Miller, 2005. "Participation in Higher Education: Equity and Access?," The Economic Record, The Economic Society of Australia, vol. 81(253), pages 152-165, June.

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