Abstract
This paper addresses the intergeneration transmission of education and investigates the extent to which early school leaving (at age 16) may be due to variations in permanent income, parental education levels, and shocks to income at this age. Least squares estimation reveals conventional results - 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. Moreover, decomposing the income when the child is 16 between a permanent component and shocks to income at age 16 only the latter is significant. It would appear that education is an important input even when we control for permanent income but that credit constraints at age 16 are also influential. However, when we use instrumental variable methods to simultaneously account for the endogeneity of parental education and paternal income, we find that the strong effects of parental education become insignificant and permanent income matters much more, while the effects of shocks to household income at 16 remain important. A similar pattern of results are reflected in the main measure of scholastic achievement at age 16. These findings have important implications for the design of policies aimed at encouraging pupils to remain in school longer.
Highlights
A considerable literature has focused on the effects of parental background on outcomes of their children such as cognitive skills, education, health and subsequent income
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 of their children such as cognitive skills, education, health and subsequent income (for a review see Black and Devereux, 2010). They estimate the causal effect of family income in ordered probit models of child’s educational attainment (from no qualification up to degree level) based on sibling differences in the panel data They provide estimates of the probability of staying-on at school past the minimum age of 16. The dependent variable PCc is a dummy variable defining participation in post compulsory education This is estimated as a linear probability model to subsequently facilitate the use of instrumental variables 16, and is a function, a(.), of parental education levels measured in years of schooling of both the mother and father (Sm , Sf), and log parental income Yh measured by father’s real log gross weekly earnings from employment 17. Paternal earnings, that we take as a measure of short term variation in the household income as we are controlling for occupation, have little impact on the schooling decisions of children
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
