Family income and children’s outcomes: evidence for the UK

Birchall, O. 2014. Family income and children’s outcomes: evidence for the UK. PhD thesis University of Westminster Westminster Business School

TitleFamily income and children’s outcomes: evidence for the UK
TypePhD thesis
AuthorsBirchall, O.

This thesis explores inequalities in educational attainment by family

background, focusing on three specific aspects of this important issue.

University participation is one outcome which displays large gaps by

family background. I examine the effect of debt aversion on university

participation and find firstly, that young people from all family backgrounds

who are debt averse are less likely to attend university when they finish

school, and secondly, that the size of this effect does not differ substantially by family background. Thus whilst debt aversion poses a barrier to entry into

university, it doesn’t explain the gap in participation rates by family

background. In fact, these gaps open up much earlier and are already

apparent when the children are still very young.

The second empirical chapter uses data at ages 5 and 7 to explore

this further, and shows that family income itself seems to have a direct

impact on children’s cognitive test scores at these ages, with other important

influential factors including the stability of the child’s environment, the

presence of the natural father, and parental behaviours such as taking the

child to the library regularly. As well as highlighting the importance of these

and other factors, this chapter makes a methodological contribution by

introducing an augmented random effects model which helps address issues

of endogeneity and a lack of within-variation in key variables that have faced

similar studies in the past.

Finally, children’s test scores demonstrate substantial stochastic

variation, with the implication that the development trajectories of groups

divided according to ability and family background may demonstrate

regression to the mean effects. Dealing with this statistical phenomenon

using various methods in order to isolate the substantive effects of family

background confirms that bright children from poorer families do drop behind

their peers, providing justification for a continued policy focus on this group. The existence of inequalities in educational outcomes by family

background also has implications for social mobility, which further highlights

the importance of investing in the cognitive development of young children

from disadvantaged backgrounds.

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