Intergenerational transmission of human capital: Evidence with an alternative instrument from Thailand

Abstract

Abstract Purpose – The purpose of this paper is to find the rate of intergenerational transmission of human capital and comparative schooling attainment between lower and higher income families using the labor force survey in Thailand. Design/methodology/approach – Instrumental variable (IV) approach has been used in this paper. The author proposed an alternative instrument for parental education to identify the rate of transmission, which is the parents’ cohorts’ mean schooling in their respective provinces. Findings – This paper found that the rate of transmission of human capital from father is higher than that from mother in Thailand. For both, the rate of transmission in Thailand is higher than that in the developed countries. In addition, it is found that children from lower income families are getting lesser education than those from higher income families in Thailand. Research limitations/implications – This paper is used as an alternative instrument that could solve the endogeneity problem in the literature of intergenerational transmission of human capital. Practical implications – The results of rate of transmission can help to make educational policies in countries like Thailand. It also could help the policymakers to evaluate and redesign the student loan scheme (SLS) in Thailand. Originality/value – This study is used as an alternative instrument for parental education to identify the rate of transmission in an IV approach. This paper is the first to identify the intergenerational transmission rate in Thailand. In addition, it evaluates Thai SLS in an intergenerational framework.