Change in human capital of the immediate family

This study examines the dynamics of human capital within immediate families and their implications for children’s education. We explore three key sources of change: the loss of human capital due to parental separations or deaths, the potential compensation of it from co-residing stepparents, and the effects of parents obtaining new educational degrees. Using high-quality Finnish full population register data on child cohorts 1987–1999 (N=702 038) and linear regression models (OLS), we find that changes in family structure are negatively related to children’s education (measured as years of education at the age of 23), consistent with findings from previous studies. Moreover, while between-family models indicate that parental attainment of new educational degrees enhances children’s educational outcomes, especially among families with moderate levels of human capital, our sibling fixed-effects models suggest that this increase may be influenced by selection bias among parents who pursue these degrees.