Essays on intergenerational transmission in Korea

This dissertation studies the effects of parents' resources on children's labor market outcomes in Korea. The educational structure in Korea has changed substantially with rapid economic growth over the last several decades. There is a substantial difference between parents and children's average educational attainment. Because of economic development and schooling difference between parents and children, the intergenerational transmission of economic status may show different patterns than in developed countries. In addition, parents' health problems may play a role to limit children's educational attainment by reducing parenting quality during early childhood or adolescent periods. The dissertation estimates various causal channels of parents' economic resources to children. The dissertation consists of three chapters. In Chapter 1, I investigate the intergenerational relationship of earnings and education in Korea with particular attention to the trajectories of vocational and academic high school graduates. I estimate that the intergenerational earnings elasticity in Korea is 0.4, which is consistent with previous studies. When educational attainment of fathers and child are controlled, parental earnings are positively associated with children's earnings, although the association decreases to 0.08 (0.10) for sons (daughters). Sons whose fathers completed only a vocational high school degree have a greater chance of attending college than sons whose fathers completed only an academic high school degree. A college degree of a father helps children to have higher earnings and to increase their chance of attending and graduating from college. Father's education has a stronger impact on children's earnings when children's educational attainment is higher. A vocational high school degree reduces a child's probability of attending and completing college compared to academic high school graduates. However, notwithstanding this educational disadvantage, vocational graduates do not appear to suffer substantially in terms of expected earnings, relative to academic high school graduates. In the second chapter, I estimate the average causal effects of parents' educational attainment on the educational attainment of children in Korea using a new method, the nonparametric bounds approach. This approach does not require the assumption of homogeneous and linear effects of parental schooling. It also uses relatively weaker assumptions, monotone treatment response and monotone treatment selection, than assumption underlying other methods and is more amenable to testing. With the additional assumption of monotone instrumental variables, it provides the tightest bounds on the average treatment effects (ATE) that an increase in parents' education increases children's educational success. It also shows the effects are overestimated in simple regression models. The third chapter examines the effects of parental health on children's educational attainment. Parental illness changes parenting quality both by affecting family wealth and in other ways that influence children's labor market outcomes. Parental health problems can especially have relatively larger impacts on children's education when children are in either primary or secondary education than other periods. Longitudinal data from the Korean Labor Income Panel Survey, for the period 1998 - 2018, enables me to examine parental illness effects in the early childhood and adolescent period on ultimate educational achievement. Empirical application in this paper pays attention to situations that each parent's either unexpected or chronic health problems change children's human capital.