The effect of parental wealth on children’s outcomes in early adulthood

This paper uses data from the British Household Panel Survey to examine the relationship between parental wealth and three child outcomes in early adulthood. Parental wealth is found to have a very strong positive correlation with children’s degree-level qualification attainment at age 25. This correlation is stronger at below-the-median wealth levels and remains strong after controlling for a wide range of confounding family characteristics. There is also evidence of a positive correlation between parental wealth and children’s employment probability and earnings. However, for both labour market outcomes the parental wealth gradient is rather weak and for the employment outcome the effect is largely mediated by children’s education.