Wealth at Birth and its Effect on Child Academic Achievement

Abstract

Abstract In this article, we examine the association between family wealth and academic achievement of children ages 5 to 12. We examine whether wealth prior to birth and at ages 4 or 5 affects child achievement during two periods of childhood, ages 5 to 8 and ages 9 to 12, for a large and relatively recent cohort of children. We also examine associations between different forms of wealth (e.g., home equity) and child achievement. Finally, we assess whether wealth prior to birth mediates racial/ethnic disparities in child achievement and disparities in achievement by maternal education/ability (AFQT). Results of our analysis indicate that overall wealth, either at birth or at ages 4 or 5, has no significant or economically important effect on child achievement test scores. We find limited evidence that wealth in the form of financial assets is positively associated with achievement test scores, particularly when measured at ages 4 or 5, but effect sizes are small. Consistent with the lack of significant associations between wealth and achievement test scores, we find that wealth does not mediate racial/ethnic disparities in achievement test scores or disparities in achievement test scores by maternal education/ability (AFQT). JEL Codes: I21, I24