NCPA - National Center for Policy Analysis

Does it Matter Who Your Parents Are?

July 27, 2015

Since the Great Recession many have been concerned about the economic mobility of young adults. Research from Federal Reserve economist Jeff Larrimore explores how much better off this generation is than their parents.

Children of parents who completed a bachelor's degree are much more likely to complete a bachelor's degree themselves. Individuals whose parents did not complete college were disproportionately likely to say they did not complete college because it was too expensive or due to family responsibilities.

  • Among individuals whose parents both completed a bachelor's degree, 21 percent had a household income of under $50,000 and 45 percent had over $100,000 in 2014.
  • Only 17 percent of individuals whose parents never attended college had incomes over $100,000 and 47 percent made less than $50,000.

Even though the starting point of a child may influence where an individual ends up as an adult, those with lower starting points still feel better off than their parents:

  • 51 percent of individuals said they are better off than their parents at the same age and only 24 percent said they are worse off.
  • The frequency that individuals felt better off was constant across socioeconomic starting points, except for individuals whose parents both had a bachelor\'s degree. Only 40 percent of individuals whose parents both hold a bachelor\'s degree said they are better off.

This suggests individuals that start from lower socioeconomic backgrounds believe they are advancing at a similar or greater frequency than those from higher socioeconomic backgrounds. Individuals were also optimistic their children will be better off than they are. Only 20 percent expect their children to be worse off and nearly half expect them to be better off.

Source: Jeff Larrimore, "Does it matter who your parents are? Findings on economic mobility from the Survey of Household Economics and Decisionmaking," Board of Governors of the Federal Reserve System, July 20 2015.

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