Life-Cycle Economic Returns to Educational Mobility in Denmark

Abstract

Although most studies of the transition from school to work take a snapshot perspective in examining economic returns to education, such returns evolve over an individual’s lifetime. We empirically test a theoretical formulation derived from the cumulative advantage mechanism about enduring life-cycle effects of educational mobility on income. We analyse income trajectories for all Danes born in 1960–1961, and we consider how the welfare state may counteract certain mechanisms of intergenerational transmission that give children with college-educated parents better opportunities in the labour market. We find only small direct effects of parental college attainment on earnings trajectories after we control for offspring college attainment. Thus, schooling acts as a powerful and enduring economic leveller of family background effects in Denmark. Our analyses also show direct effects on trajectories in property income derived from wealth, suggesting that the welfare state has a harder time equalising income from wealth than from earnings.

Beyond ‘Imagined Meritocracy’: Distinguishing the Relative Power of Education and Skills in Intergenerational Inequality

“…labour market structure and social policy). Second, longitudinal data collection and analyses are necessary, preferably with the life-course perspective (Birkelund et al, 2022; Cheng et al, 2021; Hällsten and Yaish, 2021; Yaish et al, 2021). Third, comparative studies are essential to better understand the OESD structure including its cross-national similarities and differentials.…”

“…While there is a near-consensus on the importance of incorporating maternal and paternal education in this line of research (e.g. Birkelund et al, 2022; Chmielewski, 2019), two opposite views are provided on the validity of NBH as a metric for origins. Some argue NBH is a proper predictor of economic outcomes (Hanushek and Woessmann, 2011), whereas others indicate its endogeneity problem and suggest it should be excluded from empirical models (Engzell, 2021).…”