Parents’ income has a positive influence on the educational attainment of their
children – but this impact is not nearly as strong as the influence of family
genes. These are the central conclusions of new research by Dr Erik Plug
and Professor Wim Vijverberg, published in the October 2005 issue of the
Economic Journal.
Their study uses the presence of adopted children in some households as a
‘natural experiment’ to distinguish between the effects of genes and income
on children’s educational achievements. Since adopted children share only
their adoptive parents' environment and not their genes, any relation between
their school outcomes and their adoptive parents' income is driven by the
influence parents have on their children's environment, and not by parents
passing on their genes.
The findings indicate that parental income does matter for schooling
outcomes. The effect is definitely positive though not that large: a doubling of
family income increases the time children spend in school by 0.37 years.
To put this in perspective, schooling would rise by the same amount if both
parents had 1.15 years additional education; and it is three times the size of
the gap in school attainment between boys and girls. This income effect is
equally strong for biological children after taking account of the effect of
genetically transferred ability.
Not surprisingly, parental ability makes a large difference for biological
children. Children’s schooling rises by the same amount when their parents’
income is constant and their IQ score increases by 4 points (and as a result
their schooling rises by 0.6 years) as it does when parents of a certain level of
ability double their income. Statistically speaking, given the range of variation
in the data, the income effect is only 16 percent of the IQ effect and thus is
quite weak in comparison.
Almost all studies, across countries and over time, show that children of
higher income parents tend to go to school longer. Does this mean that if
lower income parents have better economic opportunities, their children will
also do better in school? In other words, does lack of income hinder the
education of children living in lower income households?
This is the question that previous research has not addressed adequately,
despite the apparent answer suggested by the simple association between
income and educational attainment. Arriving at a satisfactory answer is
difficult because there are many confounding factors at work.
An important one is that high income is an indicator of superior ability: more
able parents are often richer than less able parents. Parental abilities
responsible for economic success are passed on genetically to the next
generation. Therefore, children of higher income parents may do well in
school because they inherit superior genes, not because their parents can
afford to buy their children a better education.
The research question can therefore be answered only if there is a good way
to separate the genetic effect from the income effect. The research strategy in
this study accomplishes this task.
The results motivate the design of educational policies that benefit poor
families. Provided that there is a reliable method to measure children’s ability,
society benefits from alleviating the financial constraints that keep able but
lower income students from seeking a more advanced education.
Such short-run assistance also has long-term benefits: not only will
programme beneficiaries earn higher incomes in the future, but they will also
be able to finance the education of their own higher ability offspring.
Nevertheless, since the income effects are small compared with the effects of
other parental characteristics, it would take large financial transfers to improve
the educational achievement of current and future generations.
ENDS
Notes for editors: ‘Does Family Income Matter for Schooling Outcomes?
Using Adoptees as a Natural Experiment’ by Erik Plug and Wim Vijverberg is
published in the October 2005 issue of the Economic Journal.
Erik Plug is at the University of Amsterdam. Wim Vijverberg is at the
University of Texas at Dallas.
For further information: contact Wim Vijverberg on +1-972-883-2042 (email:
vijver@utdallas.edu); or RES Media Consultant Romesh Vaitilingam on 0117-
983-9770 or 07768-661095 (email: romesh@compuserve.com).