Working Paper

Why the apple doesn't fall far: understanding intergenerational transmission of human capital

Abstract: Parents with higher education levels have children with higher education levels. However, is this because parental education actually changes the outcomes of children, suggesting an important spillover of education policies, or is it merely that more able individuals who have higher education also have more able children? This paper proposes to answer this question with a unique dataset from Norway. Using the reform of the education system that was implemented in different municipalities at different times in the 1960s as an instrument for parental education, we find little evidence of a causal relationship between parents? education and children?s education, despite significant OLS relationships. We find 2SLS estimates that are consistently lower than the OLS estimates, with the only statistically significant effect being a positive relationship between mother's education and son's education. These findings suggest that the high correlations between parents? and children?s education are due primarily to family characteristics and inherited ability and not education spillovers.

Keywords: Human capital; Education;

Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Working Paper Series

Publication Date: 2004

Number: 2004-12