Education and Intergenerational Income Persistence

January 22, 2019

In an article published in the most recent issue of American Sociological Review, former visiting scholar Deirdre Bloome (University of Michigan) and coauthors explore the effects of education on intergenerational income persistence, or the extent to which children’s economic outcomes in adulthood resemble those of their parents. 

Because the children of affluent parents are more likely than their low-income peers to attain higher levels of education—and because highly educated children typically enjoy higher incomes as adults than their less-educated peers—many researchers have assumed that when educational inequality increases, so will intergenerational income persistence. However, since the 1950s, intergenerational income persistence in the U.S. has remained relatively stable even as educational inequality has grown. What accounts for this discrepancy?

In their paper, Bloome and coauthors find that intergenerational income persistence has not increased because severaldifferent trends in education offsetting each other. Their abstract reads:

Analyzing National Longitudinal Surveys of Youth data, we find that growing educational inequality by parental income, along with rising economic returns to education, increased intergenerational persistence, as scholars expected. However, two countervailing trends offset this increase. The expansion of higher education reduced persistence, because completing college helps low-income children become high-income adults. Yet, this reduction in persistence was far from enough to offset the increase in persistence associated with growing educational inequality and rising educational returns. Intergenerational persistence would have increased if not for another change: within educational groups, parental income became less predictive of adult income. New methodological tools underlie these findings, tools that quantify, for the first time, education’s full force in intergenerational income persistence. These findings suggest that to reduce intergenerational persistence, educational policies should focus less on how many people complete college and more on who completes college.

Read the full paper.

 

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