Abstract:
This paper examines the link between parental income during adolescent years and
higher education choices of the offspring at age 18. This study is the first to use
a recent longitudinal data set from New Zealand (Christchurch health and development
Surveys, CHDS), in the higher education context. The paper examines the impact of
family income and other resources throughout adolescent years on later decisions to
participate in higher education and the choice of type of tertiary education at age
18. A binary choice model of participation in education, and a multinomial choice
model of the broader set of choices faced at age 18, of employment, university, or
polytechnic participation are estimated. Among the features of the study are that it
incorporates a number of variables, from birth to age 18, which allow us to control
further than most earlier studies for ability heterogeneity, academic performance in
secondary school, in addition to parental resources (e.g., childhood IQ, nationally
comparable high school academic performance, peer effects, family size and family
financial information over time). The results highlight useful features of
intergenerational participation in higher education, and the effect of parental
income on university education, in particular.