@TechReport{iza:izadps:dp973,
            	author={Belzil, Christian and Hansen, Jörgen},
            	title={Structural Estimates of the Intergenerational Education Correlation},
            	year={2003},
	month={Dec},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={973},
            	url={https://www.iza.org/publications/dp973},
	abstract={Using a structural dynamic programming model, we investigate the relative importance of
family background variables and individual specific abilities in explaining cross-sectional
differences in schooling attainments and wages. Given scholastic ability, household
background variables (especially parents' education) account for 68% of the explained crosssectional
variations in schooling attainments. When the effects of household background
variables on ability are also taken into account, the percentage raises to 85%. However,
individual differences in wages are mostly explained by abilities. Only 27% of the explained
variation in wages is accounted for by parents’ background variables as opposed to 73% by
unobserved abilities (orthogonal to family background variables). When scholastic ability is
correlated with family background variables, ability endowments explain as much as 81% of
individual wages.},
	keywords={dynamic programming;household characteristics;endogenous schooling;intergenerational education correlation},
            }