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Understanding the Effect of Parental Education and Financial Resources on the Intergenerational Transmission of Income

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  • Aiday Sikhova

Abstract

There are two essential mechanisms in the canonical model of the transmission of income across generations—parents’ financial resources and parental education. I provide novel empirical evidence to disentangle the significance of these two mechanisms in explaining the intergenerational transmission of income. Utilizing two reforms and administrative data from Sweden, I find that parents’ financial resources amount to about 25% of the effect of parental education on children’s income. Additionally, I show that parents’ financial resources matter less for sons. Overall, my findings suggest a comparatively modest impact of parental financial resources on children’s income.

Suggested Citation

  • Aiday Sikhova, 2023. "Understanding the Effect of Parental Education and Financial Resources on the Intergenerational Transmission of Income," Journal of Labor Economics, University of Chicago Press, vol. 41(3), pages 771-811.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/720390
    DOI: 10.1086/720390
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    Cited by:

    1. Friedman-Sokuler, Naomi & Justman, Moshe, 2024. "Family background, education, and earnings: The limited value of "test-score transmission"," GLO Discussion Paper Series 1388, Global Labor Organization (GLO).
    2. Cai, Shu & Li, Wei, 2024. "On the origin of cognition: How childhood conditions shape cognitive function in old age," China Economic Review, Elsevier, vol. 83(C).

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