Paying for college is often a family affair, with both parents and students contributing. We study the effects of college on family finances using administrative data on the universe of federal aid applicants in California linked to credit records. We provide the first comprehensive analysis of how both students and their parents use debt with college attendance and how prices affect those decisions. We start by using an event-study framework to explore how parents’ use of debt and credit outcomes change after their child first submits a federal aid application for college enrollment. While total debt does not change, higher-income parents shift balances from other debt to educational loans. We find that lower-income parents take out more education loans, experience less delinquency on non-educational debt, and see their credit scores rise. We then use discontinuities in eligibility for generous financial aid to test how an exogenous change in the price of college affects parental debt and financial health. We find that parents finance increases in the price of college through educational loans as well as home equity loans. Higher prices increase parental delinquency on debt. The findings highlight an important channel by which college and its rising cost may spill over into the broader financial health of families and economy. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Transfers from parents—either in the form of gifts or inheritances—have received much attention as a source of inequality. This paper uses a 19-year panel of administrative data for the population of Norway to examine the share of the Total Inflows available to an individual (defined as the capitalized sum of net labor income, government transfers, and gifts and inheritances received over the period) accounted for by capitalized gifts and inheritances. Perhaps surprisingly, we find that gifts and inheritances represent a small share of Total Inflows; this is true across the distribution of Total Inflows, as well as at all levels of net wealth at a point in time. Gifts and inheritances are only an important source of income flows among those who have very wealthy parents. Additionally, gifts and inheritances have very little effect on the distribution of Total Inflows – when we do a counterfactual Total Inflows distribution with zero gifts and inheritances, it is not much different from the actual distribution. Our findings suggest that inheritance taxes may do little to mitigate the extreme wealth inequality in society.

We examine the transmission of lifespan across generations using a unique dataset containing more than 26 million individuals born between 1880 and 1920. We document new facts about the absolute and relative mobility in lifespan. On average across cohorts, 47% of men and 57 percent of women lived longer than their parents, though this varied across cohorts. Relative measures show higher mobility, with substantially less variation across time and subpopulations. The intergenerational correlation in lifespan (a measure of persistence rather than mobility) is about 0.09 for both sexes – this low correlation is observed across races, education groups, cohorts, and birth states. Finally, we document that the intergenerational persistence of lifespan is much smaller than the persistence in socio-economic status. Moreover, correlations in lifespan and in education are largely independent of each other, suggesting that mobility in well-being may be larger than measures of income alone suggest.

Recent decades have seen substantial increases in wealth inequality; this is particularly troubling given the high persistence of this inequality across generations. Yet, we have surprisingly little understanding of how and why wealth is transmitted across generations. Is this persistence driven by innate biological differences across families? Or is it driven by growing up in a different environment with access to different opportunities? In the 2024 Downing Public Lecture, Professor Sandra E. Black discusses the economics research that tries to answer this question, focusing on how one can disentangle the role of nature versus nurture.

Growing reliance on student loans and repayment difficulties have raised concerns of a student debt crisis in the United States, but little is known about the effects of student borrowing on human capital and long-run financial well-being. We use variation induced by recent expansions in federal loan limits combined with administrative data-sets to identify the effects of increased access to student loans on credit-constrained students’ educational attainment, earnings, debt, and loan repayment. Increased student loan availability raises student debt and improves degree completion, later-life earnings, and student loan repayment, while having no effect on homeownership or other types of debt. (JEL G51, I22, I23, I26, J24)

We use the introduction of the Texas Top Ten Percent rule to estimate the effect of access to a selective college on graduation and earnings outcomes for two groups of students. For highly ranked students at more disadvantaged high schools, who gained access under the policy, college enrollment and graduation increased. Less highly ranked students at more advantaged schools, who tended to lose access, shifted toward less-selective colleges under the policy, but did not see declines in overall college enrollment, graduation, or earnings. The policy thus benefited students targeted for admission without evidence of adverse effects on displaced students. (JEL I21, I23, I24, I26)

In 2006, the federal government effectively uncapped student borrowing for graduate programs with the introduction of the Graduate PLUS loan program. Access to additional federal loans increased graduate students’ borrowing and shifted the composition of their loans from private to federal debt. However, the increase in borrowing limits did not improve access to existing programs overall or for underrepresented groups. Nor did access to additional loan aid result in significant increase in constrained students’ persistence or degree receipt. We document that among programs in which a larger share of graduate students had exhausted their annual federal loan eligibility before the policy change—and thus were more exposed to the expansion in access to credit—federal borrowing and prices increased.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

In this paper, we use comprehensive administrative data on the population of Norway to create a measure of lifetime resources, which generates several stylized facts. First, lifetime resources are highly correlated with net wealth, but net wealth is more unequally distributed. Second, labor income is the most important component of lifetime resources, except among the top 1 percent where capital income and capital gains on financial assets become important. Lastly, lifetime resources are a better predictor of child human capital outcomes than net wealth, suggesting that, in some cases, inequality in lifetime resources may be more relevant than inequality in wealth.

Schools often track students to classes based on ability. Proponents of tracking argue it is a low-cost tool to improve learning since instruction is more effective when students are more homogeneous, while opponents argue it exacerbates initial differences in opportunities without strong evidence of efficacy. In fact, little is known about the pervasiveness or determinants of ability tracking in the US. To fill this gap, we use detailed administrative data from Texas to estimate the extent of tracking within schools for grades 4 through 8 over the years 2011-2019. We find substantial tracking; tracking within schools overwhelms any sorting by ability that takes place across schools. The most important determinant of tracking is heterogeneity in student ability, and schools operationalize tracking through the classification of students into categories such as gifted and disabled and curricular differentiation. When we examine how tracking changes in response to educational policies, we see that schools decrease tracking in response to accountability pressures. Finally, when we explore how exposure to tracking correlates with student mobility in the achievement distribution, we find positive effects on high-achieving students with no negative effects on low-achieving students, suggesting that tracking may increase inequality by raising the ceiling.

We exploit a unique historical setting to investigate how refugee-specific government aid affects the medium-term outcomes of refugees who migrate as children and young adults. Among German Democratic Republic (GDR) refugees who escaped to West Germany between 1946 and 1961, only the subgroup acknowledged as being "political refugees" were eligible for refugee-targeted aid, and only after 1953. We combine several approaches to address identification issues resulting from the fact that refugees eligible for aid were both self-selected and screened by local authorities. We find positive effects of aid eligibility on educational attainment and income among male and female refugees who migrated as young adults (aged 15 to 24). Among male refugees who migrated as children (aged 1 to 14), we find that aid eligibility at arrival leads to an increased likelihood of enrollment in the academic track of secondary school, but we see no such effect on female refugees who arrived as children.

Using administrative data from Norway, we document that gifts and inheritances are a more important component of total income for women than for men. This is particularly true at the very top of the distributions of total lifetime income and net wealth. These differences are not due to gender differences in the receipt of intergenerational transfers but are driven by gender differences in total income. When we calculate counterfactual distributions of total lifetime income where gifts and inheritances are equalized across all individuals, we find that gifts and inheritances tend to reduce gender gaps across the distribution.

It is notoriously difficult to identify peer effects within the family. Using administrative data on children from both Florida and Denmark, the paper examines the effects of having a disabled younger sibling. To address the identification challenge, the paper compares the differential effects for first- and second-born children in three-plus-child families, taking advantage of the fact that birth order influences the amount of time that a child spends in early childhood with their younger siblings, disabled or not. The paper finds evidence that, relative to the first born, the second child in a family is differentially affected when the third child is disabled.

Science, Technology, Engineering and Mathematics (STEM) jobs have grown in importance in the labor market in recent decades, and they are widely seen as the jobs of the future. Using data from the U.S. Census and American Community Survey, we first investigate the role of employment in STEM occupations when it comes to recent changes in the occupational employment distribution in the U.S. labor market. Next, with data from the High School and Beyond sophomore cohort (Class of 1982) recent midlife follow-up, we investigate the importance of high school students' mathematics and science coursework, knowledge, and skills for midlife occupations. The Class of 1982 completed high school prior to technological changes altering the demand for labor. We find that individuals who took more advanced levels of high school mathematics coursework enjoyed occupations with a higher percentile rank in the average wage distribution and were more likely to hold STEM-related occupations. Findings suggest that the mathematics coursework enabled workers to adapt and navigate changing labor market demands.

Much attention has been given to rising wealth inequality in recent decades. However, understanding inequality requires an understanding of how wealth relates to the potential wealth an individual could accumulate and where this wealth comes from. Using administrative data from Norway, we create measures of potential wealth that abstract from differential consumption and spending behavior. We then examine how these measures relate to observed net wealth of individuals at a point in time and the role played by different sources of wealth in the distribution of potential wealth. We find that net wealth is a reasonable proxy for potential wealth, particularly in the tails of the distribution. Importantly, people in different parts of the potential wealth (or actual net wealth) distribution get their wealth from very different sources. Labor income is the most important determinant of wealth, except among the top 1%, where capital income and capital gains on financial assets become important. Inheritances and gifts are not an important determinant of wealth, even at the top of the wealth distribution. Finally, although inheritances are not important, parental wealth does influence child’s wealth; children of wealthy parents accumulate wealth from very different sources than children of less wealthy parents.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Access to higher education begins with a student's decision whether and where to apply to college. This paper examines racial and ethnic differences in college application behavior of high school graduates, using two recent graduation cohorts from Texas. We estimate racial and ethnic differences in the probability of applying to college, controlling for a student's college readiness, high school quality, certainty of college admissions, and high school fixed effects. We then investigate racial and ethnic differences in the choice of where to apply. We enhance the typical model of college matching by considering the social setting and high school feeder patterns of state universities. We find that racial and ethnic gaps in application rates, particularly for Hispanic students, are not explained by differential levels of college readiness, high school quality, or information regarding college admission processes. When applying to college, minorities are influenced by more than just matching their academic ability to the institution, and prefer institutions with a large proportion of same-race students and campuses where same-race students from their high school have been successful in the past.

Wealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for pre-birth factors and we find little evidence that nature/nurture interactions are important. When bequests are taken into account, the role of adoptive parental wealth becomes much stronger. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth. We further build on the existing literature by providing a more comprehensive view of the role of nature and nurture on intergenerational mobility, looking at a wide range of different outcomes using a common sample and method. We find that environmental influences are relatively more important for wealth-related variables such as savings and investment decisions than for human capital. We conclude by studying consumption as an overall measure of welfare and find that, like wealth, it is more determined by environment than by biology.

Selective college admissions are fundamentally a question of tradeoffs: Given capacity, admitting one student means rejecting another. Research to date has generally estimated average effects of college selectivity and has been unable to distinguish between the effects on students gaining access and on those losing access under alternative admissions policies. We use the introduction of the Top Ten Percent rule and administrative data from the State of Texas to estimate the effect of access to a selective college on student graduation and earnings outcomes. We estimate separate effects on two groups of students. The first-highly ranked students at schools which previously sent few students to the flagship university--gain access due to the policy; the second--students outside the top tier at traditional “feeder” high schools--tend to lose access. We find that students in the first group see increases in college enrollment and graduation with some evidence of positive earnings gains 7-9 years after college. In contrast, students in the second group attend less selective colleges but do not see declines in overall college enrollment, graduation, or earnings. The Top Ten Percent rule, introduced for equity reasons, thus also seems to have improved efficiency.

In late 2003, Norway passed a law mandating 40 percent representation of each gender on the board of publicly limited liability companies. The primary objective of this reform was to increase the representation of women in top positions in the corporate sector and decrease gender disparity in earnings within that sector. We document that the newly (post-reform) appointed female board members were observably more qualified than their female predecessors, and that the gender gap in earnings within boards fell substantially. While the reform may have improved the representation of female employees at the very top of the earnings distribution (top 5 highest earners) within firms that were mandated to increase female participation on their board, there is no evidence that these gains at the very top trickled-down. Moreover the reform had no obvious impact on highly qualified women whose qualifications mirror those of board members but who were not appointed to boards. We observe no statistically significant change in the gender wage gaps or in female representation in top positions, although standard errors are large enough that we cannot rule economically meaningful gains. Finally, there is little evidence that the reform affected the decisions of women more generally; it was not accompanied by any change in female enrollment in business education programs, or a convergence in earnings trajectories between recent male and female graduates of such programs. While young women preparing for a career in business report being aware of the reform and expect their earnings and promotion chances to benefit from it, the reform did not affect their fertility and marital plans. Overall, in the short run the reform had very little discernible impact on women in business beyond its direct effect on the newly appointed female board members.