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Charting How Wealth Shapes Educational Pathways from Childhood to Early Adulthood: A Developmental Process Model

The project: Wealth plays a pervasive and pernicious role in transmitting inequality. Wealth (assets like savings and financial holdings such as housing) differs from income (wages, salaries, and cash assistance from the government) and is generally more unequally distributed than income. This contributes to widening social inequality, including impacts on educational attainment. Wealth demonstrably impacts youth development and educational attainment, but the mechanisms resulting in this phenomenon had not yet been established. This project leveraged the Panel Survey of Income Dynamics to track family wealth, including identifying key opportunities to intervene across childhood and adolescence that could lead to higher educational attainment during adulthood.

The process: Using the Panel Study of Income Dynamics (PSID), researchers tracked families from 1984-2011, from pre-birth to early adulthood. The parent investment model provides a conceptual framework to understand how household resources allow parents to invest in the experiences, materials, and resources that foster the development and subsequent achievement of their children. This conceptual model depicts “direct effects” between wealth and educational achievement during childhood and adolescence as well as between wealth and educational attainment during adulthood. The model also depicts mediating relationships, or “indirect effects,” between wealth, parental and child mediators, and academic achievement as well as educational attainment outcomes.

Results: Key findings from this research, as published in the Journal of Youth and Adolescence, include: 

  • Wealth increased parental expectations of child performance, which led to educational achievement during the elementary school years. Wealth also fostered parents’ investment of time and money into their children’s education, learning and development, such as bringing children to museums or being involved at their school.
  • Wealth played a different role in shaping educational success during middle childhood, adolescence, and the transition to adulthood. The greatest impact of wealth on educational success came in years 6-12, which echoes previous studies on income’s impact on success. Further, family wealth when children were making the transition to adulthood was directly linked to children’s postsecondary success.
  • Family wealth during childhood was linked to children’s college success 17 years later. This finding parallels the income literature, which has clearly established that poverty and/or economic deprivation during early childhood is more consequential for later educational and occupational success.

Matthew A. Diemer, Combined Program in Education and Psychology & Educational Studies; Research Center for Group Dynamics, Institute for Social Research

Fabian Pfeffer, Department of Sociology and Institute for Social Research

Rashmita Mistry, Human Development and Psychology

Aixa Marchand, Combined Program in Education & Psychology