Is Education Inherited? Understanding Intergenerational Transmission of Human Capital

Parents with higher education levels have children with higher education levels. However, is this because parental education actually improves the outcomes of children, suggesting an important spillover of education policies, or is it merely that more able individuals also have more able children? This paper proposes to answer this question by using a unique dataset from Norway. Using the reform of the education system in the 1960s as an instrument for parental education, we find little evidence of a causal relationship between parents' education and children's education, despite significant OLS relationships. These findings suggest that high correlations between parents' and children's education are due primarily to selection and not causation. 2