Abstract
Abstract We investigate the relationship between early school-leaving and parental education and paternal income using UK Labour Force Survey data. OLS estimation reveals modest effects of income, stronger effects of maternal education relative to paternal, and stronger effects on sons than daughters. Using IV to simultaneously model the endogeneity of parental education and income, the maternal education effect disappears, while paternal education remains significant but only for daughters. In our favourite specification, which proxy for permanent income, paternal income becomes insignificant. Thus policies alleviating income constraints to alter schooling decisions may not be as effective as policies which increase permanent income. JEL codes I20; J62
Highlights
A considerable literature has focused on the effects of parental background on outcomes for their children such as cognitive skills, education, health and subsequent income (for a review, see Black and Devereux (2011))
This paper has addressed the intergenerational transmission of education and investigated the extent to which early school leaving may be due to variations in permanent income and parental education levels
We found that the education effects remained significant even when household income was included
Summary
A considerable literature has focused on the effects of parental background on outcomes for their children such as cognitive skills, education, health and subsequent income (for a review, see Black and Devereux (2011)). There are large, statistically significant, differences in the parental education and household income levels between those that remain in school compared to those that leave: almost one year extra of parental education on average and more than 20% higher paternal earnings. Peer effects might arise because the youngest might be dominated or intimidated by the oldest This developmental effect is important since most of the parents in these cohorts would have faced a selective schooling system where children were segregated into academic or vocational schools at the age of 11 based on a single test conducted on the same day across the whole country - known as the 11+ exam. The month of birth effect in educational achievement seems to be mostly driven by the early tracking faced by the earlier cohorts
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