Children’s Schooling and the Wealth of Parents over the Life Course

Esther M. Friedman, University of California, Los Angeles

The importance of education for intergenerational mobility and overall wellbeing is well established. However, less attention has been paid to the potential downside of educational investment in children -- the toll it takes on parental wealth. Parents who spend more on their children over the life course may have less wealth for their own needs later on. This paper uses data from the Panel Study of Income Dynamics to investigate the extent to which children's college enrollment is related to parents' wealth trajectories before, during, and after educating children. Not surprisingly, I find that parents of college-educated children show a pronounced dip in their wealth when their child turns 18, and this dip is sustained for several years. Despite this, parents of highly-educated children have more wealth than their counterparts from age 60 on. This is, in part, due to a faster rate of wealth accumulation over the life course.