Search Results

This dissertation investigates how and why inequalities in wealth translate into inequalities in opportunities for the next generation. Using nationally representative longitudinal data from the United States and Germany, I provide a detailed description and explanation of intergenerational wealth effects across two very different institutional contexts. In both countries, I find a strong relationship between parental wealth and children's attainment outcomes. In the United States, parents' net worth, financial wealth, and home wealth exert positive effects on the opportunities of children, both across the entire educational career and beyond that for early occupational attainment. In Germany, wealth inequalities in opportunities occur chiefly in the attainment of the selective secondary school degree that confers access to a college career.

I draw on an econometric modeling approach, labeled future treatment strategy, to increase the confidence in the causal relationship between wealth and educational outcomes. This is the foundation for the direct empirical assessment of the causal mechanisms underlying the observed wealth effects. I show that, in the United States, some but not a large part of the link between wealth and educational outcomes accrues from the advantageous neighborhood conditions to which wealthy families have access. I also propose and add empirical support to another mechanism, namely the insurance or safety net function of wealth, according to which parental wealth reduces the potential consequences of failure in the attainment process and thereby changes some fundamental parameters of the educational decision-making process.

The insurance function of wealth also helps explain the finding of substantial wealth effects in both institutional contexts. It appears that it would require a much more extensive system of "social wealth" than that found in either the United States or Germany to reduce the importance of private wealth as a safety net for children. A range of promising policy alternatives that directly target the distribution of wealth is shown to be also largely absent in both nations.