Does parental employment affect children's educational attainment?

This paper analyzes whether there exists a causal relationship between parental employment and children's educational attainment. We address potential endogeneity problems due to (i) selection of parents in the labor market by estimating a model on sibling differences and (ii) reverse causality by focusing on parents’ employment when children are aged 0–3. We use data from the German Socioeconomic Panel that provide information on household income, parental employment, and time spent with child care. Our approach disentangles income and time effects of parental employment. Overall, we find little support that parental employment affects children's educational attainment. Controlling for household income, we can rule out that having a mother who works one hour more per week lowers the probability of high secondary track attendance by more than 0.1%.

► We investigate whether there exists a causal relationship between parental employment and children's educational attainment.
► We separately analyze income and time effects of parental employment.
► There is neither a positive income effect nor a negative time effect of parental employment on children's educational attainment.