Alternatives to formal compulsory schooling for educating children

Introduction

A high degree of persistence in economic status exists across generations, but we know very little about the causal processes that drive this phenomenon. For example, children who grow up in more highly educated families have better labor market outcomes as adults than children who grow up in less educated families, but we do not know whether this is because education changes something about childhood experiences or because genetic or environmental factors that contributed to the parents' educational levels are shared by their children. This article attempts to improve our understanding of the causal processes that contribute to intergenerational immobility by exploiting historical changes in compulsory schooling laws that affected the educational attainment of parents without affecting their innate abilities. Quantifying the extent to which children's well-being can be improved by increasing their parents' education also has important implications for public policy: most discussions about the government's role in providing educational aid, for example, focus on the individual's return to education and ignore the possibility of social benefits. Knowing that there are intergenerational returns to increased schooling would provide a further rationale for such programs. Few studies have attempted to isolate the causal effect of education on the next generation's well-being. This is at least partly due to the fact that it is difficult to find plausible sources of identifying variation. It is also hard to find large, nationally representative data sets that simultaneously provide information on parental characteristics and children's outcomes.

Our use of compulsory schooling laws applied to census data allows us to overcome both of these problems. Several studies have already demonstrated a strong relationship between these laws and individuals' educational attainment and have used this relationship to identify the effects of education on earnings (Acemoglu and Angrist 2000), criminal activity (Lochner and Moretti 2004), mortality (Lleras- Muney 2005), and subjective measures of well-being (Oreopoulos 2003), but this is the first study to estimate the intergenerational effects of the U.S. laws.2 Our main analysis is based on a sample of children ages 7-15 taken from the 1960, 1970, and 1980 individual U.S. census files. We examine the effects of parental education on children's human capital accumu- lation and find that it has substantial and significant positive effects. A 1-year increase in parents' combined schooling reduces the probability that a child is at the normal grade given her age by 2-4 percentage points. This effect is somewhat larger than OLS estimates would suggest. We also find evidence that among teenagers still living at home, parents' educational attainment decreases children's likelihood of dropping out of high school.

Discussion

A few previous studies have attempted to isolate the causal influence of parental education by using variation within sibling or twin pairs (Rosenzweig and Wolpin 1994; Behrman and Rosenzweig 2002; Currie and Moretti 2003). This enables them to control for mother fixed effects but may exacerbate biases if within-pair differences in characteristics affect outcomes independent of their effect on education. Such estimates are also known ...