The Influence of Parental and Grandparental Education in the Transmission of Human Capital

Working Paper 2021-588

Abstract

This paper examines the influence of parental and grandparental education in the transmission of human capital. A natural experimental set-up, from a regional conflict that occurred in 1926 is exploited to instrument years of schooling of the grandparents’ generation whereas local labour market indicators at adolescence serve as an instrument for the education of the parents’ generation. Using a nationally representative Mexican survey that gathers detailed information on three generations, the paper shows that accounting for endogeneity reveals significantly more inter-generational mobility rather than ignoring it. The paper also documents greater persistence of family background in the older pair of parent-child links, i.e. grandparent-parent, than in the younger pair, i.e. parent-grandchildren. Results show that the direct influence of parental education on the grandchildren’s education is so dominant that the impact of grand-parental education fades away once accounting for parental education.

Authors: Hector Moreno.