Parents, Patience, and Persistence: A Novel Theory of Intergenerational College Attainment

Fuller, David L.; Vandenbroucke, Guillaume

doi:10.20955/wp.2025.003

Working Paper Revision

Parents, Patience, and Persistence: A Novel Theory of Intergenerational College Attainment

Abstract: We present a theory of intergenerational persistence in college attainment (a bachelor’s degree, BD) guided by two well-documented empirical regularities: (i) patient individuals are more likely to be college graduates, and (ii) patience persists across generations because parents choose to transmit it, along with other non-cognitive traits, to their children. To the best of our knowledge, we are the first to formalize and evaluate these mechanisms in a general equilibrium model. In the model, (i) and (ii) are endogenous outcomes implying college persistence. “Standard mechanisms”, i.e., credit constraints, parental investments, or exogenous persistence in cognitive ability, are not necessary. Theoretically, we characterize the conditions for college persistence and show that patience persistence is necessary for college persistence. Empirically, the baseline model without ability persistence, calibrated to U.S. data, matches college persistence and cross-sectional inequality moments while accounting for 30% of earnings persistence. An augmented model, with exogenous ability persistence, reveals that ability persistence accounts for 80% of earnings persistence and 10% of college persistence. The remainder of college persistence is accounted for by endogenous persistence in patience. Ability persistence in the augmented model is a reduced form for the combined effects of the standard mechanisms. Our results suggest that standard mechanisms, operating via their effects on cognitive ability, are likely to account for a smaller fraction of college persistence than the transmission of patience does. Yet, they account for most of earnings persistence as found in the existing literature. We implement a policy experiment in which a college subsidy is financed via a proportional tax on labor income. The policy distorts intertemporal tradeoffs and, hence, affects people differently depending on their patience. College attainment and its persistence increase. Specifically, the policy raises the likelihood of a BD for individuals whose parents have a BD, and it lowers that likelihood for individuals whose parents do not have a BD. This result differs from that of the existing literature, where college subsidies alleviate credit constraints and reduce persistence.

JEL Classification: E6; I2; J62;

https://doi.org/10.20955/wp.2025.003