Parental Income and the Choice of Participation in University, Polytechnic or Employment at Age 18: A Longitudinal Study

This paper examines the link between parental income during adolescent years and higher education choices of the offspring at age 18. This study is the first to use a recent longitudinal data set from New Zealand (Christchurch Health and Development Surveys, CHDS), in the higher education context. The paper examines the impact of family income and other resources throughout adolescent years on later decisions to participate in higher education and the choice of type of tertiary education at age 18. A binary choice model of participation in education, and a multinomial choice model of the broader set of choices faced at age 18, of employment, university, or polytechnic participation are estimated. Among the features of the study are that it incorporates a number of variables, from birth to age 18, which allow us to control further than most earlier studies for ability heterogeneity, academic performance in secondary school, in addition to parental resources (e.g. childhood IQ, nationally comparable high school academic performance, peer effects, family size and family financial information over time). The results highlight useful features of intergenerational participation in higher education, and the effect of parental income on university education, in particular.