Working Paper Series,
Research Institute of Industrial Economics

Abstract: Using cultural transmission, we develop a model that gives some microfoundation to the impact of residential neighborhood on children's educational attainment and then test it using the UK National Child Development Study. We find that, for high-educated parents, the better the quality of the neighborhood in terms of human capital, the higher the parent's involvement in children's education, indicating cultural complementarity. For high-educated parents, we also find that both parents' involvement in education and neighborhood's quality significantly affect the intergenerational transmission of education, the former being more potent than the latter. Low-educated parents do not spend much time educating their offspring and we show that only the quality of the neighborhood has a significant impact on their children's educational attainment.

Keywords: Education; Cultural Transmission; Cultural Substitution; Peer Effects

JEL-codes: I21; J13; J24

36 pages, October 28, 2004

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