The persistent effect of socioeconomic status on education and labor market outcomes

Abstract

Purpose This paper aims to study the effect of family socioeconomic status (SES) on academic and labor market outcomes. Design/methodology/approach The authors used a rich data set of administrative records for test scores, individual background and adult earnings of a cohort of agents, covering a period spanning the agents' upper-secondary education and their early years in the labor market. Findings The authors find that students with the highest SES obtained a 1.5 standard deviations higher score in the college admission test than students who had the same academic outcomes in the eighth grade test but belong to the lowest SES. Similarly, among students that obtained the same scores in the college admission test, those with the highest SES earned monthly wages 0.7 standard deviations higher than those with the lowest SES. Originality/value The findings highlight that family socioeconomic background continues to influence outcomes during individuals’ upper secondary education and early years in the labor market.