Does Money Buy Higher Schooling? Evidence from Secondary School Track Choice in Germany

26 Pages Posted: 16 Jan 2007

Date Written: January 2007

Abstract

The German schooling system selects children into different secondary school tracks already at a very early stage in life. School track choice heavily influences choices and opportunities later in life. It has often been observed that secondary schooling achievements display a strong correlation with parental income. We use sibling fixed effects models and information on a natural experiment in order to analyze whether this correlation is due to a causal effect of income or due to unobservable factors that themselves might be correlated across generations. Our main findings suggest that income has no positive causal effect on school choice and that differences between high- and low-income households are driven by unobserved heterogeneity, e.g. differences in motivation.

Keywords: Child poverty, educational attainment, secondary schools, sibling differences, natural experiment

JEL Classification: D31, I21, J13

Suggested Citation

Tamm, Marcus, Does Money Buy Higher Schooling? Evidence from Secondary School Track Choice in Germany (January 2007). RWI Discussion Paper No. 55, Available at SSRN: https://ssrn.com/abstract=957577 or http://dx.doi.org/10.2139/ssrn.957577

Marcus Tamm (Contact Author)

RWI ( email )

Invalidenstr. 112
10115 Berlin
Germany
+49 30 202159818 (Phone)
+49 30 202159819 (Fax)

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