Parents’ wealth affects how quickly adult children get back on their feet | Torsten Bell

Everyone loves Scandinavia. The Swedes gave us Abba (ignore the latest reincarnation) and now the Norwegians are riding to the rescue, flogging us badly needed electricity this winter. Many dream of the UK emulating the more equal societies across the North Sea, but in the world of economic research it’s the wonderful administrative data collected by Scandinavian governments on their citizens that is to die for. A new paper from Finland gives us a fresh take on how parents shape our lives.

We know rich parents help make good things happen for their children – from getting into a top uni or job. But this research focuses on the impact of parental income when something bad happens to us as adults: when we get laid off. Workers with parents in the best-off fifth of the population experience around half the unemployment of those with parents in the poorest fifth – and their earnings recover much quicker too. These differences last for years and show parental wealth shaping our life course long after we’ve left home; only a quarter of it is explained by those from richer households having better educational outcomes.

This unequal impact of job loss raises inequality (by 8%) and reduces intergenerational mobility. The research shows that even if those from poorer backgrounds do get on to the jobs ladder, their grip remains much less secure. So our parents don’t just determine our start in life, they shape how bumpy a ride it is.


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