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The impact of parental income and education on the schooling of their children

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Chevalier, A., Harmon, C., O'Sullivan, V. and Walker, I. (2010) The impact of parental income and education on the schooling of their children. Working Paper. Lancaster University Management School, Lancaster. (Unpublished)

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Abstract

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 to various set of instruments. The impact of paternal income varies between specifications but become insignificant in our preferred specification. Our results provide limited evidence that policies alleviating income constraints at age 16 can alter schooling decisions but that policies increasing permanent income would lead to increased participation (especially for daughters). There is also evidence of intergenerational transmissions of education choice from mothers to daughters.

Item Type: Working or Discussion Paper (Working Paper)
Subjects: H Social Sciences > HB Economic Theory
L Education > L Education (General)
Divisions: Faculty of Social Sciences > Economics
Series Name: Lancaster University Economics Working Paper Series
Publisher: Lancaster University Management School
Place of Publication: Lancaster
Date: 2010
Volume: No.2010
Number: No.036
Number of Pages: 33
Status: Not Peer Reviewed
Publication Status: Unpublished
Access rights to Published version: Open Access
Funder: HM Treasury Evidence Based Policy Program, The Nuffield Foundation
Related URLs:
URI: http://wrap.warwick.ac.uk/id/eprint/45717

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