Rich parents have rich children. Why is that the case?
The children of rich families tend to differ from their poorer peers in multiple ways. They have fewer siblings and more educated parents. Their parents spend more time with them and send them to better quality schools. Their cognitive skills are higher, and they complete more years of schooling. All of these channels have been found to affect an individual’s earnings (Blanden et al. 2007, Keane and Wolpin 2001, Cunha and Heckman 2008, Daruich and Kozlowski 2020). However, in order to design policies to improve intergenerational mobility, we need to understand how these channels interact with each other in generating correlations in lifetime income across generations.