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DOI: 10.5593/SGEMSOCIAL2016/B25/S07.118

THE WAGE PREMIUM FROM PARENTS’ INVESTMENTS IN THE EDUCATION OF THEIR CHILDREN: EVIDENCE FROM POLAND

J. Liwinski, E. Bedyk
Monday 3 October 2016 by Libadmin2016

References: 3rd International Multidisciplinary Scientific Conference on Social Sciences and Arts SGEM 2016, www.sgemsocial.org, SGEM2016 Conference Proceedings, ISBN 978-619-7105-76-6 / ISSN 2367-5659, 24-31 August, 2016, Book 2 Vol. 5, 905-916 pp, DOI: 10.5593/SGEMSOCIAL2016/B25/S07.118

ABSTRACT

The aim of this paper is to determine whether parents’ investments in the education of children in Poland have an impact on their wages in adulthood and whether this influence is direct or rather indirect. To answer these questions, an extended Mincer wage equation was estimated using OLS on the basis of data from the nationwide tracer survey of Polish graduates conducted in 2007 (Graduate Tracer Study 2007). The dependent variable in the wage equation was hourly net wage rate in the first job after graduating from a secondary school or academy. Parents’ investments in the education of their child have been depicted in the model with two groups of variables: the education level of each parent and participation in extra-curricular activities in the period of education in the last completed school or academy.
The results of the analysis show that parents’ investments in the education of their children have a strong, positive, direct impact on the first earnings after the end of formal education. This relationship occurs both when the investment is depicted with the education level of each parent, as well as when represented by participating in various extra-curricular activities. In addition, parents’ investments affect their children’s wages also indirectly, as indicated by the decline in the wage premium from education after including in the wage equation each group of variables depicting the parents’ investments. Thus, the omission of parents’ investments in the wage equation leads to an upward bias of the wage premium from formal education.

Keywords: investment in human capital, formal education, parental investment, extra-curricular activities, wage premium


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