We present a model of endogenous schooling and earnings to isolate the causal effect of parents' education on children …'s education and earnings outcomes. The model suggests that parents' education is positively related to children's earnings, but … regressing children's schooling on parents' schooling is mainly accounted for by the correlation between parents' schooling and …

transfers to their own parents in order to instill appropriate preferences in their children. This generates a derived demand … downpayments. We argue that parents provide help with downpayments in order to encourage the production of grandchildren, and that … such a subsidization emanates from the "demonstration effect:" a child's propensity to furnish parents with attention and …