Changing Roles of Parental Economic Resources in Children's Educational Attainment

The authors investigated whether the relationship between parents' economic resources and children's educational attainment had changed over time by comparing two cohorts from the Panel Study of Income Dynamics. Using probit regressions and Chow tests, they examined multiple measures of economic resources, including income, net worth, liquid assets, and home ownership. Results show that the associations between parents' liquid assets and college attendance became significantly stronger among the latter cohort, suggesting the increasing importance of liquid assets. Of particular interest is a change in the role of negative liquid assets (unsecured debt exceeding savings) in high school graduation: Among the former cohort, there was no difference in likelihood of graduation between students from families with negative liquid assets and those from families with zero liquid assets, but among the latter cohort, the former were more likely to graduate than the latter. Results demonstrate the importance of using diverse measures of economic resources in studying associations between parents' resources and children's educational attainment.