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How your parents’ income throughout your childhood can change your life

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A $100 bill changing hands.

A lot of research on intergenerational mobility has focused on parents' income when children are young. But new research finds that parental income when children are older could have a bigger influence on how much they earn as adults. Joe Raedle/Newsmakers

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A key factor in how children grow up and what kind of life they’ll go on to live is how much money their parents make. But it’s not just in early childhood. New research finds that parental income in the teenage years is more predictive of what kind of opportunities children will get as adults.

Steven Durlauf, a professor at the University of Chicago Harris School of Public Policy, is on the team studying this. He spoke with “Marketplace Morning Report” host Sabri Ben-Achour. The following is an edited transcript of their interview.

Sabri Ben-Achour: First off, your research is on intergenerational mobility. What exactly does that mean? How do you define it?

Steven Durlauf: Intergenerational mobility, broadly defined, is asking the extent to which the experiences of childhood and adolescence determine outcomes as an adult. And so, the idea of a mobile society is one in which the outcomes, the opportunities that one has in adulthood are not unduly constrained by the vicissitudes, the accidents of childhood.

Ben-Achour: So, as one might assume, the money that parents make has a direct effect on how well off their children go on to be. But you found that there are certain times in a child’s life when what their parents are making has extra impact.

Durlauf: Yes. And so in the research that I’ve done, and I absolutely want to mention my co-authors: Yoosoon Chang and Joon Park at Indiana University-Bloomington, and Seunghee Lee, who is at the Korea Development Institute. And what we found was interesting in the sense that it seemed that the power of every dollar for a parent, or every income increment for a parent, was increasing with the age of the child.

Ben-Achour: That is so interesting, that the money the parents are making when the kids are a little older has a larger impact than what they’re making when the kids are really young. Why do you think that is?

Durlauf: If you think about the ways that income translates into the things that affect children, they’re different in early childhood than they are in adolescence. What matters in adolescent years is what schools a child attends and what neighborhoods a person grows up in. And so I think what has most likely been uncovered in the pure statistical analyses is that parental incomes just do different things at different ages.

Ben-Achour: What other variables factor most heavily?

Durlauf: That’s a great question. And part of the ongoing research program is to move beyond income. Your family also has a structure: Are the parents both at home or not? Yet another thing is where you live. And a third thing, which I mentioned, is schools. And so ultimately, in thinking about mobility, one wants to understand how different trajectories of family income, family structure, neighborhood characteristics and school characteristics are determining adult outcomes. And then once you kind of have the the full vision, that will tell you where the policy levers are.

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