Using Sibling Samples to Assess the Effect of Childhood Family Income on Completed Schooling
We assess the impact of stage-specific family childhood income on completed years of schooling using fixed effects techniques to eliminate biases associated with the omission of unmeasured family characteristics. Sibling data from the Panel Study of Income Dynamics (PSID) indicate that family income during early childhood has a positive effect on children's educational attainment. The magnitude of the effect suggests that a 2.7-fold increase in parental income when the child is 0-4 years old leads to an increase of about half a year of schooling. We find that income during adolescence has a positive but less robust effect.
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