The study explores the relationship between fathers' and sons' earnings and investigates the function of inheritance as a means of influencing life-time inequality. It was led by Martin Weale and Professor James Sefton of the National Institute of Economic and Social Research. In common with other studies, they found that there is a strong relationship between fathers' and sons' earnings.
But while background is important in the early years, sons from a low social class compete on equal terms with those from a high one if they are successful in working for A-Levels or better. Once a son reaches at least 'A' Level standard, his father's social class and income no longer influences his own earning power.
On the other hand, if sons leave full-time education early, their fathers' incomes have a marked impact on the childrens' prospects. Those from higher income families are much more likely to have higher earnings themselves than those from poorer backgrounds.
Estimates produced by the researchers suggest that sons inherit between 20 and 60 per cent of the earning power of their fathers, depending on the way in which the calculations are performed and the extent to which allowance is made for other factors.
When allowance is made for the sons' reading and maths performance at age 11, this falls to 15 per cent, suggesting that an important factor is the effect of background and income on performance at primary school.
The study found also, not surprisingly, that fathers with high incomes are significantly more likely to leave legacies to their sons than are fathers with low incomes.
The probability of a son receiving a legacy is also positively related to the level of education he has received. A son educated to below 'A' Level has an appreciably lower chance of receiving a bequest than does one who goes on to 'A' Level or beyond. And children who gain a degree unexpectedly are the most likely to receive a legacy.
Says Martin Weale: "There is no evidence to suggest that inheritance is used by fathers as a means of offsetting disappointing earning performance by their sons, and this points to inheritance being a modest additional source of inequality."
For further information:
Contact Professor James Sefton on 44-794-661-7863, e-mail: j.sefton@imperial.ac.uk
Or Iain Stewart or Lesley Lilley at ESRC, on 179-341-3032/413119.
NOTES FOR EDITORS
1. The research report 'Inherited Wealth and the Intergenerational transmission of Inequality' by Martin Weale and Professor James Sefton, was funded by the Economic and Social Research Council (ESRC). Both are at the National Institute of Economic and Social Research, 2 Dean Trench Street, London SW1P 3HE.
2. The ESRC is the UK's largest funding agency for research and postgraduate training relating to social and economic issues. It has a track record of providing high-quality, relevant research to business, the public sector and Government. The ESRC invests more than £76 million every year in social science. At any time, its range of funding schemes may be supporting 2,000 researchers within academic institutions and research policy institutes. It also funds postgraduate training within the social sciences thereby nurturing the researchers of tomorrow. The ESRC website address is http://www.esrc.ac.uk
3. REGARD is the ESRC's database of research. It provides a key source of information on ESRC social science research awards and all associated publications and products. The website can be found at http://www.regard.ac.uk.
4. The NIESR is Britain's longest established independent economic research institute, with more than 60 years experience of applying academic excellence to the needs of business and policy makers. The Institute's objective is to promote, through quantitative research, a deeper understanding of the interaction of economic and social forces that affect people's lives so that they may be improved.