Economic Inequality and the Distribution of Offspring Human Capital

Does a persistent increase in economic inequality among families and geographic areas have implications for the educational attainment of children who have experienced this development? We address this question using longitudinal data on about 1,200 children who are observed over a period of 30 years in the Panel Study of Income Dynamics. We first model the relationship of the family and geographic factors that exist while children are growing up to their educational attainments when young adults (completed years of schooling and graduation from high school). We then simulate the effects on these attainments attributable to increases in inequality in three family economic variables—family income (relative to needs), family wealth, and the state‐specific increase in the Gini index for the state of residence.