Intergenerational transmission of education: The relative importance of transmission channels

This paper aims at quantifying the relative importance of different transmission channels generating the high levels of intergenerational correlations in education, especially in Latin America. A simultaneous equations model is applied to rich survey data from Mexico. The results show that the economic situation of the family has the highest impact, even more than heritability of cognitive abilities. The long-run economic situation seems to matter more than the current consumption level. Parental education affects the schooling outcome directly but also indirectly through the economic situation, which is particularly true for the father.