Does Family Background Affect Earnings Through Education? A Generalised Approach to Mediation Analysis

Silvia Mendolia
University of Aberdeen

Peter Siminski
University of Wollongong – School of Economics

IZA Discussion Paper No. 9917

Abstract:

We seek to quantify the role of education as a mechanism through which family background affects earnings. To this end, we propose a generalisation of statistical ‘mediation analysis’. In our approach, the treatment and mediator can be multidimensional. This allows us to directly and flexibly account for a range of background characteristics which affect child earnings through the pathway of education and through other mechanisms. The results suggest that educational attainment explains 24%-39% of the overall family background effect on earnings in Australia. The mediating role of education seems to be larger for Australia than for the UK.

Does Family Background Affect Earnings Through Education? A Generalised Approach to Mediation Analysis

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