B3741 - Intergenerational transmission of human capital - 23/03/2021

B number: 
Principal applicant name: 
Niels Rietveld | Erasmus School of Economics, Erasmus University Rotterdam
Teresa Bago d’Uva, Rita Dias Pereira, Fleur Meddens, Dilnoza Muslimova, Hans van Kippersluis, Stephanie von Hinke
Title of project: 
Intergenerational transmission of human capital
Proposal summary: 

Our original proposal, B2492, is about the joint development of health, skills and education. From the start, this involved studying the role of genetic and early-life environmental factors in shaping individuals’ health and education trajectories.

This proposal contributes to one of the key aims of our original project: to better understand the role of genes on human capital formation. On the one hand, recent studies have questioned whether the polygenic score for educational attainment captures only a biological mechanism. The proposal makes it possible to quantify the true underlying mechanisms of skills and education. Understanding this process is fundamental to understanding the health-education gradient. On the other hand, studies have shown that the polygenic score for educational attainment affects not only cognitive but also non-cognitive skills. We wish to understand the mechanisms through which genes affect education: are they mediated by cognitive or non-cognitive skills (or both)?

Unraveling the process of human capital transmission over generations is fundamental to uncover the sources of inequality. Understanding the sources of inequality in turn is crucial to design and justify redistribution policies.

The process of human capital transmission is a widely researched topic in economics and social sciences. Given that parents transmit their genes to their children and expose these children to a particular environment at the same time, it is incredibly challenging to disentangle the pathways through which human capital transmission takes place. Researchers have nonetheless tried to quantify the different channels using either structural equations (Lee & Seshadri, 2019), samples of adoptees (Plug, 2004; Björklund et. al, 2006; Plug & Vijverberg, 2003) or samples of twins (Behrman & Rosenzweig, 2002). These solutions rely either on imposing structural assumptions or on natural experiments that allows us to isolate the nature and nurture effects.

With the recent advances of social science genetics we can now have a direct measure of one’s genetic predisposition for a certain trait. Many researchers have studied the genetic propensity for schooling since schooling is a widely available phenotypic measure, and a common proxy for human capital accumulation. However, studies have shown that the Educational Attainment Polygenic Score (EA PGS) also includes an environmental component: genetic nurture (Koellinger & Harden, 2018; Kong et. al 2018). In particular, by using adoptees (Cheesman et. al, 2020), parental genetic information (Kong et. al 2018) and within-family designs (Selzam et. al, 2019), it is estimated that about 50% of the impact of the EA PGS on education attainment is a pure biological signal with the remainder 50% being genetic nurture.

This research attempts to inform the literature of human capital transmission with a direct measure of the genetic predisposition to schooling. In particular, it is an attempt to unveil and quantify the pathways of human capital transmission as proposed theoretically by Lee & Seshadri (2019). This is possible due to the richness of Alspac data set. In particular, we want to exploit the fact that a) it contains genetic information on the child’s mother and father; b) detailed information on educational achievement of the child and parents; c) detailed information of the parental behavior towards the child.

This research will attempt to quantify 5 channels of human capital transmission:
a) Direct genetic transmission
b) Genetic nurture (of the parents)
c) Parental education
d) Parental income
e) Parental time and good investments

Additional analysis will include a differentiation of the impact of those channels on the cognitive and non-cognitive skills of the children. In fact, research suggests that the EA PGS predicts both cognitive and non-cognitive skills (Alloway et. al 2020; Malanchini et. al 2020; Belsky et. al 2016). This matches research that documents that educational attainment itself is largely explained by personality traits (Borghans et. al 2016).

Impact of research: 
A better understand of the health-education gradient. The aim is to publish findings in a peer-reviewed scientific journal.
Date proposal received: 
Tuesday, 16 March, 2021
Date proposal approved: 
Tuesday, 23 March, 2021
Health Economics