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Ties that bind? Family income dynamics and children’s post-secondary enrollment and persistence

Abstract

We examine the relationship between family income dynamics—poverty, low permanent income, and income volatility—and high school graduation, college enrollment, and dropout among young adults using the Transition to Adulthood supplement of the Panel Study of Income Dynamics. Our intent is to shed light on potential mechanisms driving the transmission of intergenerational advantage to help understand whether and how such income dynamics have played a role in the persistent gap in college achievement. We find that poverty and income volatility during adolescence is related to near term educational outcomes of high school completion and college enrollment. Some of this relationship is mediated by household instability coinciding with poverty. It also apparent that the timing of poverty spells during adolescence is vital. Poverty occurring close to the end of high school drives has relatively large deleterious effects on educational attainment.

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Notes

  1. Dahl et al. (2012), using administrative data, find that there is no trend growth in the volatility of income over time.

  2. There are many candidate explanations for this relationship, including family stress and dissolution, frequent moves between schools, and the need for children to work to supplement parental income.

  3. PSID-TA sample members are children from the Child Development Supplement sample who have reached the age of 18. They are surveyed biennially as part of the Transition to Adulthood sample until they reach a maximum age 28, regardless of whether they form their own households.

  4. The PSID-TA also collects information about respondents’ employment, family formation and other topics.

  5. We include math and reading scores on the SAT and/or ACT. We also include indicator variables measuring whether or not a student took these exams, as this may signal attainment goals.

  6. For families with negative or no wealth, we assign a value of one dollar prior to log transformation.

  7. We use the STATA function ihstrans to compute the inverse hyperbolic sine transformation. This transformation facilitates processing of negative wealth values and zeros, the omission of which could understate the importance of wealth gaps and inequality.

  8. Results are available on request from the authors.

  9. A decline of 0.089 in probability.

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Correspondence to Dave E. Marcotte.

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Hardy, B.L., Marcotte, D.E. Ties that bind? Family income dynamics and children’s post-secondary enrollment and persistence. Rev Econ Household 20, 279–303 (2022). https://doi.org/10.1007/s11150-020-09516-9

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Keywords

  • Poverty
  • Educational attainment
  • Income volatility
  • Adolescence
  • Post-secondary education