The effect of parental wealth on children’s outcomes in early adulthood

Using data from the British Household Panel Survey we show that parental wealth has a positive association with a range of outcomes in early adulthood. The outcome that exhibits the strongest association with parental wealth is higher educational attainment. This association is mainly concentrated at the lower half of the distribution and remains strong after controlling for a wide range confounding family characteristics. Parental wealth also has a positive relationship with children’s employment probability and earnings, although the gradient for both outcomes is rather weak and largely mediated by children’s education. A potential driver of the small size of the latter effects is the young age of the sample.