Inequalities in Educational Outcomes: How Important Is the Family?
| Author | Julia Bredtmann,Nina Smith |
| Published date | 01 December 2018 |
| DOI | http://doi.org/10.1111/obes.12258 |
| Date | 01 December 2018 |
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©2018 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd.
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 80, 6 (2018) 0305–9049
doi: 10.1111/obes.12258
Inequalities in Educational Outcomes: How Important
Is the Family?*
Julia Bredtmann† and Nina Smith‡
†RWI – Leibniz Institute for Economic Research, Essen, Germany (e-mail:
bredtmann@rwi-essen.de)
‡Aarhus University, Aarhus, Denmark (e-mail: nsmith@econ.au.dk)
Abstract
Using rich administrative and longitudinal survey data for Denmark, weinvestigate sibling
correlations in educational outcomes, which serve as a broad measure of the importance of
family and community background. We find sibling correlations of up to 0.38, suggesting
that more than a third of the variation in educational achievement can be explained by
family background. Our results further reveal that parents’ socio-economic background
can account for a large part of the sibling correlation. Other family characteristics such as
family structure, social problems and parents’ educational preferences only contribute to
explaining sibling similarities at lower levels of the educational distribution.
I. Introduction
There is a general interest in society in understanding the importance of family background
for individual achievement. In particular, economists and social scientists have long been
interested in exploring the intergenerational relationship between parents’ and offspring’s
outcomes, such as their educational attainment or income. This interest is motivated by
the aim to assess the degree of equality of opportunity in a society. Family background,
broadly defined, represents circumstances for what members of the offspring generation
cannot be held accountable and, therefore, a strong dependence of individual outcomes on
family background implies low equality of opportunity (cf. Roemer, 1998).1
JEL Classification numbers: I21, I24, J13.
*Wewould like to thank the editor, two anonymous referees as well asAnders Bj ¨orklund, Sebastian Otten, Daniel
Schnitzlein and participants at the Economics Seminar at the Ruhr UniversityBochum, the 6th Inter nationalWorkshop
on Applied Economics of Education, the 29th ESPE conference, the 30th Congress of the EEA, and the VfSAnnual
Conference 2015 for helpful comments and suggestions. Julia Bredtmann gratefully acknowledges funding from the
German Academic Exchange Service (DAAD).
1According to Roemer’sconcept of equality of oppor tunity, individual outcomes are determined by two factors:
‘efforts’which are subject to individual choice, and ‘circumstances’, which are factors that lie outside the individual’s
control. Equality of opportunity would prevail in a situation in which the distribution of an outcome of interest is
independent of circumstances. Roemer’sconcept thus goes beyond the meritocratic definition of equality of opportu-
nity,in which circumstances might still condition the final outcome if they affect the choice set (and hence the effort)
of the individual.
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Although the concept of intergenerational mobility is certainly a meaningful one, the
major limitation of traditional parent–offspring associations is that they are based on one
single characteristic of the family. However, family background has an impact on children
in many ways that cannot be picked up by one single variable. An alternative approach to
measure the importance of family background is to investigate the sibling correlation in
economic outcomes. A sibling correlation can be interpreted as the fraction of the total
variation in an outcome that can be attributed to factors shared by siblings. Sibling corre-
lations thus provide a broad measure of the overall importance of family and community
background.
The majority of studies analyzing sibling correlations in economic outcomes focuses
on investigations of sibling (or brother) correlations in permanent earnings or income.
For the USA, estimates of brother correlations in permanent earnings lie in the range of
0.45–0.50 (e.g. Solon et al., 1991; Levine and Mazumder, 2007; Mazumder, 2008). These
estimates are much lower in the Scandinavian countries, where they centre around 0.2
(e.g. Bj¨orklund et al., 2002; Bj¨orklund, Lindahl and Lindquist, 2010; Schnitzlein, 2014).
While the investigation of sibling correlations in income is undoubtedly relevant, from an
equality-of-opportunity perspective, it is particularly important to focus on the differential
opportunities individuals have before they enter the labour market.
Another part of the literature, therefore, focuses on analyzing the role of family and com-
munity background for educational outcomes. Estimates of sibling correlations in years of
education lie in the range of 0.5–0.6 for the USA and 0.4 for Norway and Sweden (Solon,
Page and Duncan, 2000; Raaum, Salvanes and Sørensen, 2006; Lindahl, 2011; Bj¨orklund
and J¨antti, 2012).2This suggests that, even in the Scandinavian countries, which are char-
acterized by an extensive welfare state and a long history of offering free postsecondary
and higher education, 40% of the variation in educational outcomes can be attributed to
family and community background. In our study, we focus on Denmark, a country that
has been shown to rank at the top of the educational mobility scale.3,4We are interested in
whether, in a high-mobility country such as Denmark, family background still matters for
children’s educational outcomes.
Although sibling correlations give us an estimate of how much of the variation in
educational outcomes can be attributed to family and community background, they do
not tell us anything about which background characteristics matter for children’s educa-
tional achievement. Bj¨orklund and J¨antti (2012) compare the sibling correlation in years of
education with the respective (squared) intergenerational correlation between children’s
and parents’ education and find that family background has an impact on children’s edu-
cational outcomes that goes far beyond the effect of parents’education. Hence, if parental
education is not the only important driver of educational inequalities, what else is it that
makes siblings similar in terms of their educational achievement?
2For an overview of estimates of sibling correlations in years of education across countries as well as a formal
representation of the relationship between a sibling and an intergenerational correlation, see Bj¨orklund and Salvanes
(2011).
3In a cross-country comparison of the intergenerational correlation in years of education across 42 nations,
among them 13 Westerncountries, Hertz et al. (2007) find Denmark to possess the highest level of intergenerational
educational mobility among the Westerncountries and one of the highest levels across the world.
4The Danish institutional setting and educational system is outlined in Online AppendixA.
©2018 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd
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