The Price of Independence: The Economics of Early Adulthood

10. Family Background and Children’s Transitions to Adulthood over Time

Chapter 10 Family Background and Children’s Transitions to Adulthood over Time MELANIE GULDI, MARIANNE E. PAGE, AND ANN HUFF STEVENS T he transition to adulthood is almost by definition a process of breaking away from one’s family of origin. Nevertheless, family background has an impact on the success of this transition. For example , Gary Sandefur, Jennifer Eggerling-Boeck, and Hyunjoon Park (2005) and David Ellwood and Thomas Kane (2000) show that parental education and family income are positively correlated with the probability that a young adult will pursue postsecondary education, and Tom Hertz (2005) estimates that a son born into a family whose income is in the top 10 percent of the income distribution is twenty-three times more likely to end up in the top 10 percent as an adult than a son born into the bottom 10 percent. Over the past thirty years, several social and economic changes may have altered the impact of parents on the success with which their children approach adulthood. In this chapter, we look at whether the importance of family background has changed over time. We compare various “markers” of adulthood for two groups who were coming of age in the mid-1970s and early 1990s. We look at whether early adult income levels, educational attainment, and the probability of starting one’s own family differ by parental income and education, and we ask how these differences have changed over time. Knowing the extent to which family influences are changing is an important part of understanding why today’s youth are taking longer to reach traditional markers of adulthood than 261 262 The Price of Independence previous generations. There may be important policy considerations as well. For example, if the association between parental income and the economic success of their children is becoming stronger over time, and if this association is due to the changing impact of income itself rather than the effects of other family characteristics correlated with income, then policies aimed at increasing the financial resources of poor families may also affect trends in outcomes for youths. We come to three conclusions. First, a successful transition to adulthood differs markedly across individuals who grew up in high- and lowincome families and with high- and low-educated parents.1 Second, there is little evidence that the influence of characteristics associated with parental income has changed over time. An exception is that those who grew up in high-income families seem to be delaying childbearing more than they did in the past. Third, the relationship between young adults’ education and that of their parents appears to have become stronger over time. This is in marked contrast to the lack of a significant change between parental education and the next generation’s income, and it is somewhat surprising given the large increases in the wage returns to schooling that took place over this period. Why Might Family Background Affect Youth Outcomes? Many studies have documented a strong relationship between family background characteristics—particularly parental education and income —and young adults’ socioeconomic outcomes (see, among many examples, Duncan and Brooks-Gunn 1997; Settersten, Furstenberg, and Rumbaut 2005). Ellwood and Kane (2000) report that youth with similar academic credentials enroll in college at very different rates depending on their parents’ income and education. Gary Solon (1992) and others show that the incomes of young men in their mid- to late twenties are highly correlated with their father’s income during childhood. Table 10.1 shows the likelihood of attaining several markers of adulthood by age thirty according to the quartile distribution of family income when the individual was age fourteen to seventeen, for two groups of young adults, the first born between 1954 and 1957 and the second born between 1970 and 1973.2 For both cohorts, young adults’ income and education increase dramatically as their family’s income increases. Adult income is nearly twice as high among those whose parents’ income was in the top quartile of earners than among those whose parents’ income was in the bottom quartile. Similarly, the probability that a child from the top quartile will complete college is approximately four to seven times larger (depending on the cohort) than the probability that a child from the bottom quartile will complete college. Marriage probabil- ities also increase with family income, although less steeply. The probability of becoming a parent, however, falls with parental income. This makes sense...