Can Parental Wealth Explain the Low Rates of Intergenerational Educational Upward Mobility in Germany?

In Germany, intergenerational educational mobility is low. In 2012, Germany was ranked 22^nd among 23 OECD states in proportion of educational upward mobility (24%), and third in proportion of educational downward mobility (18%) among individuals aged 25-64. Among younger German individuals (aged 25-34), educational upward mobility (19%) is even less common than downward mobility (24%). One explanation for the relatively high rate of downward educational mobility or stability in Germany can be the attractiveness of the vocational training track as an alternative to tertiary education. However, the strong German vocational educational system cannot fully explain the low rate of educational upward mobility. In our study we aim to narrow this research gap by focusing on the role of parental wealth. Specifically, parental wealth is likely to exert a so-called “social status maintenance effect”, implying that children who expect to inherit their parents' wealth will show a lower motivation to invest in educational attainment because they will maintain their parental social status by means of wealth transfers. Importantly, parental wealth has also been found to have a so-called “social insurance effect”, implying that children to wealthy parents will opt for (risky) long-term human capital investments, because they have a familial safety net to fall back upon in case of set-backs. This positive effect of parental wealth on intergenerational educational upward mobility might however be offset in Germany by the generous welfare state, offering a social safety net to all citizens, independently of parental wealth. We therefore expect parental wealth to exert a negative effect on intergenerational educational upward mobility in Germany. We will test our hypothesis drawing on data from the German Socio-Economic Panel Study (GSOEP).