Wealth stratification in the early school career in Germany
Introduction
Children’s parental social background crucially shapes their educational achievement, thus reproducing social inequality between generations (Blau & Duncan, 1967). Studies have found that children of parents with high socioeconomic status (SES) have on average higher competences and show better performance in school than children with low SES (Bradley & Corwyn, 2002). As a consequence of their better performance, they are more likely to make more ambitious educational decisions (i.e., primary effect of social origin) and they are more likely to receive higher educational degrees. Yet, children of parents with high SES make more ambitious educational decisions even when they have the same competences and school performance as children of parents with low SES (i.e., secondary effect of social origin) (Boudon, 1974; Jackson, 2013).
To approximate parental SES, researchers usually use measures of parental education, income or occupational class. However, recent research on the United States, Sweden and Norway suggests that parental wealth should be added to the existing measures comprising parental SES, to better capture social inequalities in education (Elliott & Sherraden, 2013; Hällsten & Pfeffer, 2017; Pfeffer, 2018; Wiborg, 2017). Ignoring wealth as a specific dimension of SES may result in an underestimation of social stratification in education.
Wealth possesses specific features that are not captured by traditional measures of SES, but that contribute to social stratification in unique ways. Wealth can stem either from self-accumulation over one’s own life-course or from transfers (e.g., inter-vivo transfers or bequests). Unlike earned income, education or occupational status, the accumulation of which generally requires time, effort, and ability, transferred wealth offers access to capital and goods independently of the individual’s decisions or their abilities. Because wealth is less volatile than income, it is a more accurate indicator of an individual’s or household’s long-term consumption potential and capacity to maintain a particular standard of living (Spilerman, 2000). Yet, wealth does not have to be consumed in order to affect behavior. The mere expectation of incoming wealth and the potential use of wealth can impact individual behavior (Brown, Coile, & Weisbenner, 2010).
The association between children’s competences and their educational performance with parental wealth follows the same pattern as what previous research has found for other measures of parental SES. Children of wealthy parents have higher competences and show better performance in school as compared to children of less wealthy parents. In the United States, children in wealthy households were found to have higher test scores in math than children of less wealthy households (Friedline, Masa, & Chowa, 2015; Orr, 2003; Williams Shanks, 2007; Yeung & Conley, 2008). The findings for the association between parental wealth and reading test scores are, however, inconsistent (Elliott, Destin, & Friedline, 2011). For Sweden, Hällsten and Pfeffer (2017) found a substantial positive association between parental wealth and children’s grade point average (GPA) in the ninth grade. Wiborg (2017) observed the same for Norway. Cesarini, Lindqvist, Östling, and Wallace (2016)), however, found no association between lottery wins and children’s competences or GPA in Sweden. This last finding suggests that wealth may have different impacts on children’s educational outcomes, depending on whether children grow up with the knowledge of the existence of parental wealth or not (Hällsten & Pfeffer, 2017, p. 331).
Additionally, parental wealth has been found to be associated with more ambitious educational decisions and higher educational attainment. Research on the United States showed that children of wealthy parents were more likely to attend college as compared to children with less wealthy parents (Conley, 2001; Jez, 2014; Pfeffer, 2018; Zhan, 2006). In Sweden, children of wealthy parents were also more likely to attend and graduate from academic secondary school tracks and to choose tertiary fields of study, which are associated with higher earnings (Hällsten & Pfeffer, 2017; Hällsten & Thaning, 2018). In the only study on Germany, Pfeffer (2011) analyzed the effect of parental wealth on children’s educational attainment measured as the number of years of schooling attained. He found a positive and statistically significant association between parental wealth and children’s educational attainment. While parental education shows the highest partial correlation with children’s educational attainment, the correlation with parental wealth was of similar magnitude as the correlations with income and occupational class.
The relationship between parental wealth and children’s educational outcomes can be expected to become even more relevant in the future, given that wealth inequality has grown during the last decades in most Western countries (Piketty & Zucman, 2014). Yet, important research gaps remain. First, there is a lack of research in countries other than the United States, Norway, and Sweden. The results for these countries are probably not generalizable to most other countries because of different educational and welfare state systems.
Second, there are few studies on the relationship between parental wealth and children’s early educational outcomes. But past research has shown that social stratification of competences emerges already for young children (Feinstein, 2003; Linberg, Schneider, Waldfogel, & Wang, 2019) and that early investments in competences are more effective than later ones (Cunha & Heckman, 2008). With regards to parental wealth, research has not yet shown when social disparities emerge, nor how these develop throughout the early years of schooling.
Third, most existing studies on wealth stratification in education looked either at performance in school or test scores or at educational decisions. Therefore, they cannot differentiate between primary and secondary effects of parental wealth or they only hinted at this differentiation (Hällsten & Pfeffer, 2017; Huang, Guo, Kim, & Sherraden, 2010). Policy implications, however, would differ depending on whether primary or secondary effects are more relevant for children’s educational outcomes.
In this paper, we aim to make two contributions to reduce these research gaps: First, we assess the association between parental wealth and early educational outcomes in an institutional context with an early and important educational decision, namely the transition to different secondary school tracks after elementary school in Germany. This early tracking may make an early investment in education particularly important. Within this context, we examine the relationship between parental wealth and (1) children’s competences1 at the beginning of primary school; (2) the development of competences throughout primary school; and (3) children’s transition to secondary school.
Second, we integrate wealth stratification in the transition to secondary school tracks in the framework of primary and secondary effects, both theoretically and empirically.
Section snippets
Educational system
Similar to Scandinavian countries and in contrast to the United States, most children in Germany attend the public education system, which is free from tuition fees. Financial resources of schools are more equally distributed in Germany as compared to the United States as schools are funded centrally by the federal states and not by taxes levied in the municipality. German citizens enjoy a more generous social security system than their American counterparts. Just like in the Scandinavian
Competence
Based on existing research, four interrelated mechanisms may explain the relationship between parental wealth and children’s competences. The unit of analysis in this literature is usually the family.
- 1)
Wealth increases resources for families’ investment in children. Parents can invest their wealth in the purchase of resources, that foster the competences of their children (Becker & Tomes, 1986). These resources include learning materials (e.g., books or educational software) as well as
Data
We use data from the German National Educational Panel Study (NEPS) (Blossfeld, Roßbach, & von Maurice, 2011) for our empirical analysis.3
Descriptive statistics
Table 1 shows the distribution of all the variables used in our analyses. The first three columns show the summary statistics of the variables used in the analysis of test scores (sample A), separately for each year in which a test in math took place. In sample A, parental net worth ranges from -3.75 m EUR to 195 m EUR, with the second-highest value being 16 m EUR. The mean of net worth in sample A is 195k EUR and the median is 100k EUR. About 9 % of the households in sample A have a negative
Discussion
In this paper, we investigated the association between parental wealth and (1) children’s competence, operationalized as test score results in math at the beginning of primary school; (2) the development of children’s math competence throughout primary school; and (3) children’s educational transition to secondary school, operationalized as attendance to the highest secondary school track.
In line with prior research, we find that even after controlling for traditional measures of SES, parental
Funding
This work was supported by the “German Research Foundation” (DFG), project entitled “The Effect of Parental Wealth on Educational Decisions” under Grant No. 403547843.
Acknowledgements
We are grateful for comments made by the participants of the 3rd International NEPS Conference on November 22–23, 2018 in Bamberg, Germany; the ESCR Workshop “Wealth Inequality and Mobility” on December 6–7, 2018 in Esch-sur-Alzette, Luxembourg; and the RC28 Spring Meeting on March 21–23, 2019 in Frankfurt am Main, Germany. Moreover; we are grateful for the comments and manuscript editing support by Klaus Pforr, Till Stefes, Dorian Le Jeune, Nourhan Elsayed, and Alejandra Rodríguez Sánchez.
References (65)
- et al.
Assets and educational achievement: Theory and evidence
Economics of Education Review
(2013) - et al.
Taking stock of ten years of research on the relationship between assets and children’s educational outcomes: Implications for theory, policy and intervention
Children and Youth Services Review
(2011) - et al.
Transforming wealth: Using the inverse hyperbolic sine (IHS) and splines to predict youth’s math achievement
Social Science Research
(2015) - et al.
The accuracy of home owners’ estimates of house value
Journal of Housing Economics
(1992) - et al.
Multiple dimensions of social background and horizontal educational attainment in Sweden
Research in Social Stratification and Mobility
(2018) - et al.
Parental income, assets, borrowing constraints and children’s post-secondary education
Children and Youth Services Review
(2010) - et al.
Socioeconomic status gaps in child cognitive development in Germany and the United States
Social Science Research
(2019) Assets, parental expectations and involvement, and children’s educational performance
Children and Youth Services Review
(2006)- et al.
Assets and liabilities, educational expectations, and children’s college degree attainment
Children and Youth Services Review
(2011) - et al.
Nonparametric multiple imputation for questionnaires with individual skip patterns and constraints: The case of income imputation in the national educational panel study
Sociological Methods & Research
(2017)
Educational expansion and persistent inequalities of education: Utilizing subjective expected utility theory to explain increasing participation rates in upper secondary school in the Federal Republic of Germany
European Sociological Review
Higher education or vocational training? An empirical test of the rational action modelof educational choices suggested by Breen and Goldthorpe and esser
Acta Sociologica
Human capital and the rise and fall of families
Journal of Labor Economics
Previous school results and social background: Compensation and imperfect information in educational transitions
European Sociological Review
The American occupational structure
Social background and between-track mobility in the general education system in West Germany and in East Germany after German unification
Zeitschrift für Soziologie
Education as a lifelong process (NEPS)
Zeitschrift für Erziehungswissenschaft
Education, opportunity and social inequality: Changing prospects in western society
Reproduction in education, society and culture
Socioeconomic status and child development
Annual Review of Psychology
Explaining educational differentials: Towards a formal rational action theory
Rationality and Society
Interpreting and understanding logits, probits, and other nonlinear probability models
Annual Review of Sociology
Household debt and financial assets: Evidence from Germany, Great Britain and the USA
Journal of the Royal Statistical Society Series A, (Statistics in Society)
The effect of inheritance receipt on retirement
The Review of Economics and Statistics
Multiple imputation for missing data via sequential regression trees
American Journal of Epidemiology
Wealth, health, and child development: Evidence from administrative data on Swedish lottery players
The Quarterly Journal of Economics
Resilience in Midwestern families: Selected findings from the first decade of a prospective, longitudinal study
Journal of Marriage and the Family
Being black, living in the red: Race, wealth and social policy in America
Capital for college: Parental assets and postsecondary schooling
Sociology of Education
Formulating, identifying and estimating the technology of cognitive and noncognitive skill formation
The Journal of Human Resources
What skills can buy: Transmission of advantage through cognitive and noncognitive skills
Sociology of Education
Fifty years since the coleman report: Rethinking the relationship between schools and inequality
Sociology of Education
Cited by (8)
Social stratification in downgrading during secondary school after ambitious track choices
2022, Research in Social Stratification and MobilityCitation Excerpt :We discuss our augmentation procedure in supplementary materials A. We use parental education to measure SES because research found that parental education is a better predictor for children’s educational attainment than other dimensions of parental SES like parental occupational class or income (Bukodi et al., 2021; Dräger & Müller, 2020). Moreover, parental education captures more directly parental resources that may compensate for a low academic preparedness like parents’ capacity to help children with schoolwork or knowledge of the educational system.
The multiple mediators of early differences in academic abilities by parental financial resources in Germany
2022, Advances in Life Course ResearchNot all wealth is the same: types and levels of wealth and children's university enrolment
2023, European Sociological ReviewImperialism Unawareness: The Case of Citizenship Construction Among Mexican Transnational Students
2023, Journal of Latinos and EducationWealth Stratification and the Insurance Function of Wealth
2023, Social Inclusion