A father-child relationship is always very special and is known to play a
very unique role in shaping the child's mental health. Children, especially
sons, who remember spending quality time with their fathers, have been found to
be more capable of handling stress during later life than those who had poorer
relationships with their dads.
It now appears that fathers have a lot more to contribute. Sons are always
at the receiving end of their dads' wealth, but research has shown that
inheriting good work ethics, and the ability to study, from dads are much more
gratifying that inheriting money.
David Sims, economics professor at Brigham Young University and lead
investigator of the study, said, 'We know there's a correlation between
fathers' income and sons'. What's got less attention is the mechanism.We wanted to see if the
intergenerational income correlation is due to money - what we can buy for our
kids - or if the human capital attributes passed from father to son play a role
Usually, fathers with higher human capital endowments also had better
incomes, so it was difficult and tricky to separate the two factors and decide
which had a better impact.
To overcome this problem Professor Sims and his colleagues set up the
following statistical model. It consisted of two smart fathers who were
similarly skilled and educated. One resides in a town with a robust labour
market and higher income while the other father who wasn't so lucky lives in a
town with a depressed labour market and much lower earnings.
If money were the only thing that mattered then the son of the first
father would end up with a higher income in comparison to the son of the unlucky
father. However, if human
capital is the deciding factor, then the two sons are likely to end up with
For the study, researchers used a very detailed government administrative
data on a large sample of Swedish fathers whose sons were born between the
years 1950 and 1965. Salary
information of fathers and sons and the information on fathers' human capital
such as education and nature of occupation, were gathered.
Sims and his colleagues identified a strong correlation between fathers'
incomes and that of their sons. They then employed a statistical methodology to
identify the differences in fathers' income due to factors other than human
capital, like differing labour market conditions. Income differences in the fathers not related to their human capital were
found to be weaker predictors of their son's income.
'We can conclude that, for the men in our dataset, differing human
capital endowments passed from father to son account for about two-thirds of
the overall intergenerational income relationship,' Professor Sims said. 'We don't offer a final answer here, but we
do offer some boundary conditions and present a methodology that could help
unravel the question, Sims continued.'
Thus money was
not found to be the only thing that mattered, human assets mattered a lot too,
in deciding progeny's success.