Skip to content

Ask an Economist: Why Are the Earnings of Children So Close to Those of Their Parents?


George-Levi Gayle

George-Levi Gayle is an economist at the Federal Reserve Bank of St. Louis, where he has worked since May. His research focuses on family and gender issues in labor markets, the effect of information friction on earnings and compensation, and the estimation of semi-parametric models. Originally from Jamaica, he enjoys music, sports and travel. View more of George-Levi Gayle's research.

Q. Why are the earnings of children so close to those of their parents? Is this relationship the same for blacks and whites?

A: In a recent paper, my co-authors, Limor Golan and Mehmet Soytas, and I1 wrote that the structure of the family and the division of labor within the household were the main sources of the correlation of earnings across generations. For a long time, the economics literature has included ample documentation on the strong correlation between the earnings of fathers and sons, namely between 35 to 50 percent. (Now that women make up at least half of the workforce, this literature needs updating to cover the changing roles of females—both mothers and daughters.) Besides income, other factors need to be considered: how parents accumulate human capital in the labor market, the availability and returns to part-time jobs versus full-time jobs and the return to parental time invested in children.

In another study, we looked at the difference between blacks and whites in the intergenerational transmission of human capital.2 We focused on the roles of time and income spent in the early childhood years to see how they impacted educational outcomes, if at all. We found that the time that parents spend talking to and otherwise interacting with their children is the major reason for the disparity in educational outcomes between black and white children. For example, for black and white parents who spent the same amount of time interacting with their children, there is no black-white attainment gap.


  1. Gayle, George-Levi; Golan, Limor; and Soytas, Mehmet A. "What Is the Source of the Intergenerational Correlation in Earnings?" Working Paper 2015-019A, Federal Reserve Bank of St. Louis, August 2015. See [back to text]
  2. See Gayle, George-Levi; Golan, Limor; and Soytas, Mehmet A. "What Accounts for the Racial Gap in Time Allocation and Intergenerational Transmission of Human Capital?" Working Paper 2015-018A, Federal Reserve Bank of St. Louis, August 2015. See [back to text]
Commenting Policy: We encourage comments and discussions on our posts, even those that disagree with conclusions, if they are done in a respectful and courteous manner. All comments posted to our blog go through a moderator, so they won't appear immediately after being submitted. We reserve the right to remove or not publish inappropriate comments. This includes, but is not limited to, comments that are:
  • Vulgar, obscene, profane or otherwise disrespectful or discourteous
  • For commercial use, including spam
  • Threatening, harassing or constituting personal attacks
  • Violating copyright or otherwise infringing on third-party rights
  • Off-topic or significantly political
The St. Louis Fed will only respond to comments if we are clarifying a point. Comments are limited to 1,500 characters, so please edit your thinking before posting. While you will retain all of your ownership rights in any comment you submit, posting comments means you grant the St. Louis Fed the royalty-free right, in perpetuity, to use, reproduce, distribute, alter and/or display them, and the St. Louis Fed will be free to use any ideas, concepts, artwork, inventions, developments, suggestions or techniques embodied in your comments for any purpose whatsoever, with or without attribution, and without compensation to you. You will also waive all moral rights you may have in any comment you submit.
comments powered by Disqus

The St. Louis Fed uses Disqus software for the comment functionality on this blog. You can read the Disqus privacy policy. Disqus uses cookies and third party cookies. To learn more about these cookies and how to disable them, please see this article.