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

31 Pages Posted: 9 May 2016 Last revised: 28 Sep 2024

See all articles by Silvia Mendolia

Silvia Mendolia

University of Aberdeen

Peter Siminski

University of Wollongong - School of Economics

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.

Keywords: equality of opportunity, intergenerational mobility, mediation analysis

JEL Classification: I24, C49, J62

Suggested Citation

Mendolia, Silvia and Siminski, Peter, Does Family Background Affect Earnings Through Education? A Generalised Approach to Mediation Analysis. IZA Discussion Paper No. 9917, Available at SSRN: https://ssrn.com/abstract=2776922

Silvia Mendolia (Contact Author)

University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom
0044 1224 272182 (Phone)

Peter Siminski

University of Wollongong - School of Economics ( email )

Northfields Avenue
Wollongong, New South Wales 2522
Australia

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