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Dads pass on how to make money to sons

June 24, 2012 at 11:47 PM   |   Comments

PROVO, Utah, June 24 (UPI) -- Human capital -- intelligence, advice, work ethic -- may be why high-income fathers have richer sons, U.S. researchers say.

Study author David Sims, an economics professor at Brigham Young University said there's a correlation between a father's income and son's -- sons of fathers with high incomes tended to end up with higher than average incomes themselves.

"We wanted to see if the intergenerational income correlation is due to money -- what we can buy for our kids -- or if human capital attributes passed from father to son play a role as well," Sims said in a statement.

The researchers used data from Sweden from 1950 to 1965 that included salary information for fathers and sons as well as clues about fathers' human capital: education levels and the nature of their occupations.

Sims and his colleagues used a statistical methodology to isolate differences in fathers' income due to something other than human capital, like in the example of similar fathers who worked in differing labor market conditions.

The study, published in the Journal of Political Economy, found income differences not related to a father's human capital were weaker predictors of a son's income, or in other words, human capital matters.

"Differing human capital endowments passed from father to son account for about two-thirds of the overall intergenerational income relationship," Sims said.

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