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

  • 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)

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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File URL: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201112.pdf
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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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  1. 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.
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  4. Arnaud Chevalier, 2004. "Parental Education and Child’s Education - A Natural Experiment," Working Papers 200414, School Of Economics, University College Dublin.
  5. Blanden, Jo & Gregg, Paul & Macmillan, Lindsey, 2011. "Intergenerational Persistence in Income and Social Class: The Impact of Within-Group Inequality," IZA Discussion Papers 6202, Institute for the Study of Labor (IZA).
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  8. Claire Crawford & Lorraine Dearden & Costas Meghir, 2007. "When You Are Born Matters: The Imapct of Date of Birth on Child Cognitive Outcomes in England," CEE Discussion Papers 0093, Centre for the Economics of Education, LSE.
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  12. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
  13. 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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  18. 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).
  19. 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.
  20. Løken, Katrine Vellesen, 2007. "Family income and children's education: Using the Norwegian oil boom as a natural experiment," Working Papers in Economics 03/07, University of Bergen, Department of Economics.
  21. Jenkins, Stephen P. & Schluter, Christian, 2002. "The Effect of Family Income During Childhood on Later-Life Attainment: Evidence from Germany," IZA Discussion Papers 604, Institute for the Study of Labor (IZA).
  22. Erik Plug, 2004. "Estimating the Effect of Mother's Schooling on Children's Schooling Using a Sample of Adoptees," American Economic Review, American Economic Association, vol. 94(1), pages 358-368, March.
  23. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
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