Parental Wealth Effects on Living Standards and Asset Holdings: Results from Chile

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Parental Wealth Effects on Living Standards and Asset Holdings: Results from Chile

by Florencia Torche and Seymour Spilerman (Sociology)

This paper examines aspects of the replication of inequality across generations in Chile and assesses the extent to which particular parental resources influence the living standards and wealth holdings of adult children. Parental resources are measured by education, occupational status and household wealth, using information about the parents of both respondent and spouse. Living standard of the respondent is indexed by four common living standard components; household wealth by five asset types. We find that each of the parental resources contributes to the living standard outcomes and that the path of transmission is through parental investments in the educational attainment of children. In comparison, it is principally parental wealth, among the parental asset types, that impacts upon children's asset holdings. Moreover, the main path of transmission is one of direct transfers by parents, rather than investments in the education and earnings of offspring. The analysis employs both regression formulations for each of the outcome variables and LISREL models which view the living standard components as indicators of a latent standard of living construct, and the asset measures as indicators of a latent household wealth construct.