Parental wealth key to children’s outcomes

Parental wealth is positively associated with a wide range of outcomes for children in early adulthood, according to a paper from the London School of Economics.

The study claims to provide the first UK estimates for the associations between parental wealth during adolescence and various children’s outcomes in early adulthood (at age 25), based on data from the British Household Panel Survey.

Key points

  • A positive link is found for all dimensions considered including educational attainment, employment, earnings and home-ownership.
  • The associations 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
  • For home-ownership the association appears to mainly reflect the effect of parental wealth transfers
  • Financial constraints may play an important role in higher education choices for some low-wealth financially indebted households.

Source: Eleni Karagiannaki, The Effect of Parental Wealth on Children’s Outcomes in Early Adulthood, CASEpaper 164, Centre for Analysis of Social Exclusion (London School of Economics)