Understanding the Roles of Parental Assets in Child's Educational Trajectory: Incorporating Diverse Economic Measures and Mediating Pathways

Background and Purpose: While the traditional educational attainment model recently pays more attention to the roles of wealth among parental economic resources, there is still no consensus on how different types of assets make a contribution to child's educational outcomes. Also, asset effects on high school dropout are not examined to date, and mediating pathways of social-psychological characteristics are more investigated with educational achievement (e.g. measured by test scores, GPA) rather than long-term educational attainment. From the academic gaps identified, this study investigates (1) the effects of parental assets in child's educational attainment (from high school dropout to college degree attainment) and (2) mediating roles by parental involvement in child's education, child's educational expectations, and child's self-esteem in the impacts of parental economic resources on child's educational attainments.

Methods: Study sample of 9th/10th graders (as of 1996 and 1998, N=632) is drawn from the Child and Young Adult data supplement to the National Longitudinal Study of Youth 1979. Dependent variables are four educational attainments examined for 8 years since 9th/10th grade: ever dropped out of high school, high school completion, college attendance, and college degree attainment. To find out distinct effects of different types of assets, independent variables of main interest include parental assets (net worth, gross financial assets, gross non-financial assets, and home-ownership) and liabilities (secured and unsecured debts), along with income. Other parental and child's characteristics are also controlled (e.g. child's cognitive ability, gender, race, school quality, mother's education and marital status, and urban residence). Logistic regression analyses are employed with weighted data, and the mediating effects are tested by using Baron and Kenny (1986)'s approach.

Results: Study findings support significant effects of parental assets in child's education. Income is significantly associated with the risk of high school completion, college attendance, and college degree attainment, but not with high school drop-out. It is notable that significant effect of income generally disappears when specific measures of assets and liabilities are included in the same model. Financial assets, non-financial assets, and home-ownership are mostly significant predictors across all educational attainments examined, while net worth is significantly associated only with high school dropout. Another major finding is on mediating effects. Child's educational expectations partially mediate the effects of net worth and financial assets on the risk of high school dropout. In addition, the effect of financial assets on high school graduation (with diploma) is mediated by parental involvement.

Conclusions and Implications: Study results expand current academic knowledge by articulating how differently income and assets affect child's educational outcomes. Parental assets predict positive academic outcomes of child, and the complex nature of the relationships between economic resources and the outcomes are in part explained by child's educational expectations and parental involvement. Empirical evidence supports that innovative asset-building programs and policies, such as 529 college savings plans and Child Development Accounts, are essentially relevant and important to secure household assets specific to child's education and thus help children not falling out of educational trajectory and getting more opportunities to higher levels of education.