Parents, quite understandably, want to offer their children the best possible chances in life by giving them socio-economic resources (Vanhuysse & Gal 2023). But if higher-status parents can transmit more to their children, this may also make societies less intergenerationally mobile or meritocratic. The intergenerational transmission process is therefore a key topic in debates about equality of opportunity and whether our societies reward merit or luck (Tepe, Vanhuysse & Lutz 2021). Understanding what parents transmit to their children, and how, can also inform debates relevant to the European Skills Agenda about how best to reform education systems, to regulate labor markets and to fine-tune other policy tools to produce fairer societies.
What help do parents actually give their children in the labor market? One key advantage is human capital, in the broadest sense. Parents affect their children’s accumulation of hard and soft skills, embodied in their diplomas and their ‘knowledge capital’ but also in their non-cognitive abilities. All this human capital then helps children earn more later. However, parents, when they can, also employ a wide array of other strategies to transmit advantages. For example, higher-status parents might simply leave the family business to their offspring or, especially in less competitive markets, use their weak ties through favoritism or nepotism to allow their kids access to better jobs.
In other words, above and beyond the ‘indirect’ human capital effect, parents also have a ‘direct’ effect in helping their children in life. The bad news is that these direct mechanisms are often invisible. The good news is that human capital can be measured ever more widely. This is what we exploited in new research at Oxford Economic Papers (Bonomi Bezzo, Raitano & Vanhuysse 2023). We investigated almost 7000 sons aged 30-54 in eight societies using the OECD’s PIACC database, which includes unusually rich information on altogether four types of people’s human capital: not just their formal educational attainment, but also their particular field of study, their cognitive ‘hard’ skills (literacy and numeracy scores), and their non-cognitive ‘soft’ skills (perseverance and curiosity).
Shining a wider light on human capital to narrow down the remaining dark corners
The idea is simple. Bonomi Bezzo, Raitano and I wanted to check if any ‘residual’ correlation between parental educational background and sons’ labor market earnings still remains even after controlling for this wider range of four dimensions of sons’ human capital. In other words, by shining a wider light to make more human capital transmission channels visible, we can narrow down the dark corners that persist. This gives us a somewhat more focused indication of whether – and where – any less visible non-human capital transmission channels still remain. What we found was interesting:
In three societies (Germany, Norway, and the USA), the intergenerational transmission process is wholly mediated just by the first of the four human capital dimensions: formal educational attainment. Here, parents help to boost their sons’ earnings mainly by boosting their level of schooling. But in the other five societies (France, Poland, and even more so Italy, Spain, and the UK), a significant residual parental background association remains even after we control for all four human capital dimensions. These societies are probably further away from resembling education-based meritocracies. This points to other types of advantages sons receive. In other words, something else that is largely hidden from view, important in the labor market, but not human capital-related is being transmitted here by parents. It might still be that yet another (fifth or sixth) type of valuable human capital which we simply could not observe is particularly important here. Alternatively, these may just be cultures where parents more strongly mobilize other resources through non-transparent labour market selection and promotion practices, informal recommendations, friendship networks, and so on.
Policy directions
Of course, the existence of such a residual parental background association does not provide any conclusive causal ‘smoking gun’ of better-educated parents using their social connections or even nepotism to help their sons earn more. But there does remain a stronger whiff of other weapons than just skills at work in the background, such as social connections and other forms of family capital.
How can policies make a difference? Here is where many of the principles of the European Pillar of Social Rights must be put into practice. Clearly, widely accessible, high-quality early-childhood education policies can be a great equalizer of life chances everywhere (Vanhuysse 2015). Europe is a continent of elderly-oriented welfare states embedded within societies of strongly child-oriented parents (Gal, Vanhuysse & Vargha 2018). Policies could thus redress existing age and class imbalances by aiding all children and young adults more.
In societies where formal educational attainment matters most, reforms could focus primarily on improving wider access to higher-quality (higher) education. But as Bonomi Bezzo, Raitano and I note, in societies where a significant residual parental background association remains, improving educational equality of opportunity would probably not be enough to foster social mobility. To make our societies more intergenerationally mobile and to level the playing field more for children from all families, we need to understand more precisely the role of non-educational family capital.
Further reading:
Bonomi Bezzo, F., Raitano, MI., & Vanhuysse, P. (2023). Beyond Human Capital: How Does Parents' Direct Influence on their Sons' Earnings Vary across 8 OECD Countries? Forthcoming, Oxford Economic Papers, Vol. 75.
Gal, R., Vanhuysse, P., & Vargha, L. (2018). Pro-Elderly Welfare States within Child-Oriented Societies. Journal of European Public Policy, 25(6), 944-958. https://doi.org/10.1080/13501763.2017.1401112
Tepe, M., Vanhuysse, P., & Lutz, M. (2021). Merit, Luck, and Taxes: Societal Reward Rules, Self-Interest and Ideology in a Real-Effort Voting Experiment. Political Research Quarterly, 74(4), 1052–1066. https://doi.org/10.1177/1065912920960232
Vanhuysse, P. (2015). Skills, Stakes, and Clout: Early Human Capital Foundations for European Welfare Futures. In B. Marin (Ed.), The Future of Welfare in a Global Europe (pp. 267-296). Ashgate. http://ssrn.com/abstract=2574845
Vanhuysse, P., & Gal, R. I. (2023). Intergenerational Resource Transfers in the Context of Welfare States. In M. Daly, B. Pfau-Effinger, N. Gilbert, & D. Besharov (Eds.), The Oxford Handbook of Family Policy over the Life Course (pp. 1015-1033). Oxford University Press. https://doi.org/10.1093/oxfordhb/9780197518151.013.48