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Structural Estimates of the Intergenerational Education Correlation

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  • Christian Belzil

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris, ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique, IZA - Institute for the Study of Labor)

Abstract

Using a structural dynamic programming model, we investigate the relative importance of family background variables and individual specific abilities in explaining cross-sectional differences in schooling attainments and wages. Each type of ability is the sum of one component correlated with family background variables and a residual (orthogonal) component which is purely individual specific. Household background variables (especially parents' education) account for 68% of the explained cross-sectional variations in schooling attainments, while ability correlated with background variables accounts for 17% and pure individual specific ability accounts for 15%. Interestingly, individual differences in wages are mostly explained by pure individual specific abilities as they account for as much as 73% of the explained variations in wages. Family background variables account for only 19%, while ability endowments correlated with family background account for 8%.

Suggested Citation

  • Christian Belzil, 2003. "Structural Estimates of the Intergenerational Education Correlation," Post-Print hal-00541883, HAL.
    • Handle: RePEc:hal:journl:hal-00541883
    DOI: 10.1002/jae.716
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    References listed on IDEAS

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    1. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
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    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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