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UNITRAN Report Summary

Project ID: 312906
Funded under: FP7-IDEAS-ERC
Country: Denmark

Final Report Summary - UNITRAN (Understanding Intergenerational Transmissions: A Cross-Disciplinary Approach)

The ambition of the UNITRAN project was to combine the best sociology and economics has to offer to establish a new understanding of intergenerational transmissions. A key motivation behind the project is that sociology and economics each has major “blind spots” in the ways in which it addresses intergenerational transmissions, and by combining theories and methods from each discipline, we may develop a new and better understanding. The major contributions of economics to sociology are to (1) use formal mathematical models to describe processes of intergenerational transmissions, (2) clarify behavioral assumptions regarding why parents invest in their children, and (3) empirically test competing models of intergenerational transmissions. The major contributions of sociology to economics are to (1) conceptualize the many types of parental resources that are transmitted from parents to children, (2) understand heterogeneity in parents’ motivations for investing in their children and (3) consider a broad range of relevant socioeconomic outcomes.

The project has advanced the state of the art both theoretically and empirically. Theoretically, and drawing on ideas from each discipline, it has developed new models that help to explain how parents invest in their children, how family background shapes parental investments, and how children and their parents respond to changes in external environments. For example, it has developed a new model that describes how parents transmit cultural resources to children in a dynamic process that lasts throughout childhood. This model contributes to sociology by using formal mathematical models to develop a consistent theoretical model (hitherto absent in sociology) and to economics by arguing that cultural resources comprise a key dimension of intergenerational transmissions (hitherto not recognized in economics). In addition, the project has drawn on ideas from demography and social psychology to develop new theory which links family structure and the emotional climate in the home to parenting practices, which in turn shape children’s resources (e.g., IQ), preferences (e.g., educational expectations), and later socioeconomic outcomes. In addition to theoretical developments, the project has also contributed empirically by using large-scale data and econometric methods to analyze processes of intergenerational transmissions. For example, it has modelled the process through which parents transmit cultural resources to children as a dynamic process in which parents change their behavior in light of new information that they receive on the returns to past investments. It has also used new data on identical twins to estimate the effect of children’s cultural resources on educational outcomes and has used counterfactual simulations to assess how inequality in the distribution of parents’ cultural resources shapes educational inequality in the population. In the same line of research, it has also analyzed how resources in the extended family, for example grandparents’ cultural resources, wealth, involvement, and educational expectations, shape grandchildren’s socioeconomic outcomes either directly or indirectly via parents. As a final example, it has made creative use of “quasi-experimental” shocks to families’ fertility decisions, for example random variation in spouses’ fecundity and family preferences, to analyze how family structure affects children’s socioeconomic outcomes.

The theoretical and empirical results from the project have the potential to inform policies to reduce inequality by highlighting different types of intergenerational transmissions that were not previously – or that were only poorly – understood. For example, the result that parents’ investments in children’s cultural resources have long-term implications for children’s outcomes and shape educational inequality may be used to design new social policies that foster cultural resources in children. This would be beneficial because traditional social policies, which redistribute income and focus on “old” social problems, do not address inequality in the cultural domain. Moreover, the finding that extended families contribute to intergenerational transmissions suggest that social policies, which mostly targets nuclear families (i.e., parents and children), would benefit from also targeting extended families (i.e., also grandparents and aunts and uncles). These are just a few examples of how the new insights from UNITRAN might inform policy.

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