Passing It On: Parent-to-Adult Child Financial Transfers for School and Socioeconomic Attainment

As wealth inequality increases, the importance of parental financial transfers for socioeconomic attainment may also rise. Using data from the 2013 Panel Study of Income Dynamics Rosters and Transfers Module, this study investigates two questions: how parental financial transfers for education have changed over time, and what the relationship is between these transfers and adult socioeconomic outcomes. Results suggest that transfers for education have increased, have become more commonplace, and have become more dependent on parental wealth over time. Holding constant several individual and parental measures, the relationship between parental transfers for school and adult socioeconomic attainment is positive. This relationship holds when using three-stage least squares models to account for potential endogeneity of financial transfers for school. Overall, results support arguments that parental financial transfers for education facilitate the intergenerational transmission of socioeconomic standing.