The effect of parental wealth on children’s outcomes in early adulthood

a research paper by Eleni Karagiannaki published by the Centre for Analysis of Social Exclusion (CASE)

Abstract

This paper presents the first UK estimates of the association between parental wealth during adolescence and a range of children’s outcomes in early adulthood. Parental wealth is positively associated with all outcomes examined (which include educational attainment, employment, earnings and home ownership).

The estimated associations are found to operate over and above parental education and income and in many cases are stronger than them.

For labour market outcomes a small share of the association reflects the indirect effect of parental wealth on children’s education whereas for home ownership the estimated association appear to mainly reflect the effect of parental wealth transfers.

Further analysis by wealth component shows that degree attainment is more strongly associated with housing wealth than financial wealth. However, important effects are also estimated for financial wealth indicating the existence of financial constraints for low wealth-financial indebted households. For home ownership and earnings the estimated association are stronger for financial wealth.

JEL Classification: D1, D3, I21, J62, J31

Full text (PDF 31pp)

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