The Effect of Family Income during Childhood on Later-Life Attainment: Evidence from Germany. ISER Working Papers.

This study examines income effects on German children's educational pathways, considering all three secondary school tracks (gymnasium, realschule, and hauptschule) and using measures of income and other variables that cover the entire childhood. The study controls for father's and mother's educational qualifications, examining the impact of money income rather than needs-adjusted income, and exploring whether income effects differ for native German children and children from households headed by foreigners (guestworkers). Data come from the German Socioeconomic Panel Survey. Study results find that, for this German child outcome, it is late-childhood income that matters, and income effects are linear rather than non-linear. The study also finds that income effects that do exist are small, in absolute terms, and relative to the effects of other determinants. These effects only apply to native German children. The effects are nonexistent for children of guestworker households. Income effects are small relative to the impact of differences in parental educational qualifications or institutional factors related to the federal state of residence. (SM)