Report

A Detailed Picture of Intergenerational Transmission of Human Capital

quick summary

Using data from the Health and Retirement Study (HRS), this 2009 report explored how parental education relates to four separate outcomes in the children’s generation: education, lifetime earnings, health and (financial) wealth. The authors related parents’ educational ranks to children’s ranks on these four outcomes.

Using data from the Health and Retirement Study (HRS), this 2009 report explored how parental education relates to four separate outcomes in the children's generation: education, lifetime earnings, health and (financial) wealth. The authors related parents' educational ranks to children's ranks on these four outcomes.

The “children” in this study were Americans who have recently retired or are approaching retirement age. The report observed them at a point when their outcomes reflect accumulated life experience.

The result is a mixed story. For a wide swath of the middle of the parental education distribution, the distribution of children's outcomes was extremely broad: for a given level of parental education, the most successful children (that is, those at the 90th percentile) end up at the top of the overall education, wealth, health and earnings distributions, and the least successful children (that is, those at the 10th percentile) for that same level of parental education end up at the bottom.

This suggests a fluid and mobile society since children in the middle do not just end up in the middle: they end up at all points in the distribution in nearly equal measures. At both tails of the parental distribution, however, we see far closer correspondence between parents' and children's outcomes. The most successful children of parents with low educational ranking (that is, the 90th percentile of the children whose parents have the least education) have only average wealth, health or education; they attain about the median outcome. This pattern seems to be more pronounced for education, health and wealth than for lifetime earnings, which is arguably a poorer measure because of data limitations, most notably top-coding in the administrative earnings history data.