Intergenerational Transmission of Poverty and Inequality: Evidence and Simulations from Four Developing Countries

Jere Behrman, University of Pennsylvania
Ben Crookston, Brigham Young University
Kirk Dearden, Boston University
Le Thuc Duc, Vietnam Academy of Social Sciences (VASS)
Lia Fernald, University of California, Berkeley
Subha Mani, Fordham University
Whitney Schott, University of Pennsylvania
Aryeh D. Stein, Emory University

Parents play major roles in determining the human capital of their children, and thus influence the future earnings of their children. Models of investments in children’s human capital posit that these investments are determined in part by parental resources (financial and human capital) and child endowments. There is considerable emphasis on the possibilities of reducing poverty and inequality in the next generation by improving schooling attainment and income/consumption for parents in poorer households. However, the extent of these intergenerational effects on poverty and inequality is an empirical question that has not been examined. This paper simulates the magnitudes of reductions in poverty and inequality through substantial increases in parental schooling attainment and consumption of poorer households in Ethiopia, India, Peru and Vietnam using Young Lives data. Results suggest that reductions in poverty and in inequality in the parents’ generation reduce poverty and inequality in the children’s generation only somewhat.