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Education and human capital investment

What Else Do Parents Give their Sons? PIAAC Evidence on the Intergenerational Transmission of Labour Market Advantage in 8 OECD Countries

Exploring the Program for the International Assessment of Adult Competencies (PIAAC) database, which provides detailed information on educational pathways and scores in literacy and numeracy tests, we analyse close to 7000 sons aged 30-54 in France, Germany, Italy, Spain, Norway, Poland, the UK and the US around 2011-2012. We investigate to what degree the association between parental background (educational attainment and the number of books in the parental home) and sons’ earnings is mediated by various dimensions of sons’ human capital (educational attainment, field of study, numeracy and literacy scores, and proxies of non-cognitive skills). We find that the intergenerational transmission process is wholly mediated by sons’ formal education only in the US. By contrast, a significant residual association remains even after we control for all four dimensions of sons’ human capital in Italy, Spain and Poland (for both parental background proxies) as well as France and the UK (just for parental education). While we cannot exclude that this residual association is due to further unobservable background-related skills sons might have, this points to family factors unrelated to human capital-based meritocracy that might play a particularly important role in the intergenerational transmission of labour market advantage in these five societies.

 

Joint work of Franco Bonomi Bezzo, Michele Raitano and Pieter Vanhuysse.

 

People:

Pieter Vanhuysse

 

The Full Transfer Cost of Rearing Children: What Parents Contribute in Raising the Next Generation

Demographer Robert Gal, sociologist Marton Medgyesi and political scientist Pieter Vanhuysse use NTA and NTTA to compare the net resource transfer burdens of working-age parents and non-parents for fourteen European countries. We advance National Transfer Accounts methodology by splitting up macro-aggregates into three groups: parents, non-parents living in childless households and non-parents cohabiting with children. We estimate all cash, in-kind, and time transfers of the market economy and the household economy, irrespective of whether they are transmitted through public or familial channels. We find that on average, parents contribute almost twice as many net transfers as non-parents. Non-parents contribute almost exclusively to public transfers in net terms. Parents provide, in addition to such public transfers, a still larger amount of familial transfers. Especially in view of rising childlessness rates in aging societies and the public good nature of children as the next generation's tax and social security contributors, this asymmetric transfer burden between parents and non-parents carries multiple implications for debates on public policy, population politics and a just society.

Keywords: National Transfer Accounts, parenthood, cost of children, intergenerational transfers; distributional equity, pronatalist polic

Joint work of Robert Gal, Marton Medgyesi and Pieter Vanhuysse.

People:
Pieter Vanhuysse

Intergenerational resource transfers: Pro-Elderly Welfare States within Child Oriented Societies.

With demographers Robert Gal and Lili Vargha, Pieter Vanhuysse has asked what resources generations give each other. From different angles, the latter two papers both argue that notwithstanding decades of ‘social investment states’ rhetoric, we actually observe surprisingly little state investment in young people. Looking at public policies alone offers an incomplete and biased picture of intergenerational transfers. It’s a proverbial case of looking for a lost car key only where the streetlight shines at night. The reason is a key asymmetry in modern societies. Working-age people pay taxes and social security contributions to institutionalize care for older persons as a generation. But they invest substantial private resources (money and time) to raise their own children, often with large social returns. Once one also incorporates these family resources, counter intuitive and radically different conclusions follow. Children actually receive more than twice as many per-capita resources as older persons in Europe – but not from policies. We live in pro-elderly welfare states within child-oriented societies.

A key  public policy question is therefore: why do states not take a greater role in helping families raise children? Children are also public goods. Their contributions will later benefit all of society, including non-parents. Since children are also ever scarcer in aging societies, we ask: why has child investment not been socialized much more than we can observe in reality? Robert Gal and I plan to keep investigating these questions and their normative implications in the near future. 

Read opinion pieces for the World Economic Forum  and The Independent  on pro-elderly welfare states within a child-oriented Europe

People:
Pieter Vanhuysse

Early Human Capital Foundations for European Welfare Futures

In 'Skills, Stakes and Clout: Early Human Capital Foundations for European Welfare Futures (The Future of Welfare in a Global Europe. Ashgate), Pieter Vanhuysse asks why and how early human capital investment may boost the future foundations of European welfare states. Regarding the material circumstances of young adults and very young children, and educational outcomes such as PISA results in mathematics, reading, writing and problem solving, the years since the 2008-2009 crisis have seen the emergence of a new ‘North-East to core’ good gradient in Europe from Finland over Poland, Germany, the Czech Republic, and Slovenia to France. Outside of this gradient, the new periphery now includes the UK and Ireland, all of Southern Europe, and Eastern but no longer Central Europe. Reviewing decade-long evidence on subsidized, high-quality early childhood education pilot programs, I argue that such programs are a tested tool for marrying economic efficiency with social justice (equality of opportunity). I conclude by reflecting on which human skills are likely to be valued in the Second Machine Age. And I recommend policies, including new schemes to compensate for the way in which Europe's existing core-periphery divide is being (self-)perpetuated through periphery-to-core brain drain of highly skilled young Europeans.

Find the research here:
Skills, Stakes and Clout: Early Human Capital Foundations for European Welfare Futures

Keywords: early childhood, young Europeans, generations, human capital, PISA results, social investment, welfare futures

People:
Pieter Vanhuysse