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The Effect of Parental Transfers and Borrowing Constraints On Educational Attainment

A strong positive association between one's school attainment and that of one's parents has been consistently documented in numerous empirical studies. The underlying cause of this intergenerational correlation has been the subject of contentious debate in the social sciences for many years. Two competing types of explanations are prominent. The first is based on the heritability of traits, that is, that children of more educated parents may inherit the abilities, personalities and preferences that led to the higher educational achievement of their parents. The second type of explanation is based on human capital production, namely that more educated parents, due to their own preferences for more educated children and/or due to their higher wealth, may invest more heavily in their children's human capital.