The long-lasting effects of family background: A European cross-country comparison

• We investigate the association between family socio economic status during childhood and old-age human capital.
• We analyze which factors lead to intergenerational persistence of human capital.
• We show evidence of large cross-country heterogeneity across 11 European country.
• Education explains large part of the within and between country heterogeneity.
• Intergenerational persistence is strongly correlated with income inequality across-countries.

This paper investigates how and to what extent the association between family socio-economic status (SES) during childhood and old age health, income and cognition varies across 11 European countries. It uses the Survey on Health, Aging and Retirement in Europe (SHARE) and SHARELIFE, which collects retrospective information on respondents’ family backgrounds during their childhood. We also analyze which factors lead to intergenerational persistence of human capital by accounting for childhood health and school performance, education and labor market outcomes. The results show a strong relationship between family SES during childhood and old age outcomes and a large cross-country heterogeneity. Education appears as the main channel for this gradient and explains most of the estimated cross-country heterogeneity. Moreover, we show evidence of a strong correlation between income inequality and our estimates of intergenerational persistence of human capital.