Schooling, family background, and adoption: does family income matter?
One would expect that family income is an important positive factor in the school attainment of children. However, evidence on this relationship is often tainted by the lack of control for parental ability, since at least a portion of ability is transferred genetically to children. This paper considers empirical strategies that control for both observed and unobserved parental ability. In the end, family income still has a significant effect, which must therefore be causative. It implies that high-ability children in low-income families face binding credit constraints that society may wish to relieve.
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ability measures adopted children adoption experiment attainment of children biased biological children C. M. Schmidt causal censored regression model child children's education Descriptive statistics Dustmann educational achievement educational attainment educational outcomes empirical analysis errors in italics estimated income effects family characteristics family income affects family income measured family variables gender genetic transfers Haveman and Wolfe heteroscedasticity households households households human capital impact of family income coefficients income component income in 1975 individual characteristics IQ test scores IZA Discussion Papers labor economics Labor Market lifecycle likelihood function log family income log income 1975 log random income lottery experiment luck measured in 1975 mother number of siblings Panel Data parental income parental IQ random income 1992 random income shocks randomly selected parents residuals sample of adopted schooling function selectivity bias sibling model significant Soest Standard errors Table Unemployment University of Amsterdam variance Vijverberg Wage Wisconsin Longitudinal Survey WLS samples