Intergenerational Transmission of Human Capital in Early Childhood

It is a well-known fact that the level of parents' education is strongly correlated with the educational achievement of their children. This effect is more robust than that of any school or institutional factors. Moreover, differences in skills between children with less versus better educated parents are observed at an early age and have lasting effects on educational attainment. Although the correlation between parents and children's educational attainment has been well documented, there is hardly any evidence as to what is behind the observed strong intergenerational transmission of human capital. Therefore the purpose of this paper is to shed some light inside the black box of transmission of human capital by disentangling the potential channels through which human capital is transmitted from mothers to their children. Using the German socio-economic panel (SOEP), we aim to identify what it is that more educated mothers do and that allows them to transmit human capital (i.e. skills) to their children at this early age. We proceed by successively including variables that are affected by maternal human capital and that may affect childrens' skills in a linear regression of maternal human capital on childrens' verbal, social and motor skills. These include birth weight, father support, institutional childcare attendance as well as the frequency of several activities with the child. We focus on the skills of children at age 2-3 years. The psychological and pedagogical literature shows that at this age, considerable differences in skills already emerge between children with differently educated parents. Moreover, at this age, most German children have been exposed to (pre-)school and peer effects only in a limited way. We look at relatively large differences in maternal educational attainment. We distinguish between attaining an academic education, reaching a vocational degree versus not reaching either of these levels of education. These are used as proxies for human capital, including the human capital acquired in formal education but also human capital obtained through innate ability, educational values and other favorable environmental characteristics. A first finding is that motor skills are not related to the level of maternal education. Secondly, according to our results, the included channels together account for the entire verbal and social skill gap between children from less versus better educated mothers at age three. Birth weight and the intensity of father's support are important channels of transmission of human capital for both verbal and social skills. Moreover, reading stories to the child is most relevant for the transmission of verbal skills whereas for social skills, a crucial channel for maternal human capital is the attendance of institutional childcare. This implies that there is important scope for reducing educational inequalities by encouraging attendance of institutional childcare before age three and by increasing parental awareness of the high relevance of early verbal stimulation such as through reading stories.

Coneus, Katja and Maresa Sprietsma (2009), Intergenerational Transmission of Human Capital in Early Childhood, ZEW Discussion Paper No. 09-038, Mannheim.