Following in parents' educational footsteps reaps financial rewards

'Nepo baby' is the less flattering term for children who get jobs in the same field as their parents, helped by their parents' connections and reputation. The children are given a head start in a working life where the route to success is not just about ability and talent.

In the cultural or media world in particular, 'nepo babies' provoke debate. But in a broader and more general sense, is it also an advantage to have the same education as one's parents? And if so, what are the mechanisms at work?

Assistant Professor Jesper Fels Birkelund, from the Department of Sociology, explores these questions in a new study (see fact box). He maps the income of 40-year-olds who have followed their father's or mother's educational path and compares it with the many who have not.

The extensive statistical analysis of some 140,000 Danes concludes that there is generally a small financial advantage to having the same higher education as one's parents. However, the study also documents that the picture varies greatly according to educational background (see graph).

"The association is most clear for medicine, law and, to some extent, engineering. Doctors or lawyers earn on average 5-10 per cent more if at least one of their parents has a degree in the same field of study. However, these significant differences are only found in a few professions. For many public sector employees, such as nurses and teachers, salaries are so regulated that there is no effect."

The differences between fields also mean that the overall earnings effect of following in one's parents' footsteps is smaller. Across all areas of education, the effect is around 2%. At the same time, however, the new study adds nuance to other studies that have shown that an individual's social background becomes less important for their labour market success once they have a bachelor's degree.

Income difference in per cent if parents have a degree in the same field of study (selection)

No signs of nepotism

But what explains why children of doctors, lawyers and engineers seem to benefit financially from having the same education as their parents?

According to Jesper Fels Birkelund, the evidence points to a particular factor, especially for the first two groups:

The study excludes some mechanisms that are typically brought up in the 'nepotism' debate. For example, that children use their parents' social networks to get a job.

"Relatively many doctors and lawyers have income from self-employment, for example from a private medical or legal practice. And the differences in income are largely due to the higher income from this source. So children who follow in their parents' footsteps are more likely than others to be successfully self-employed."

And they seem to get by without direct help from their parents. There is nothing in the study to suggest that the children have benefited from any special privileges or actual nepotism: they rarely take over their parents' businesses. And they are not more likely to be employed in companies where people from their parents' network hold senior management positions.

"The study thereby excludes some mechanisms that are typically brought up in the 'nepotism' debate. For example, that children use their parents' social networks to get a job," says Jesper Fels Birkelund.

Benefits from the upbringing

Because of its broad design, the study cannot map nepotism in small niches such as the cultural and media world. Nor can it identify the general mechanisms that make some people better at generating income through their own business or otherwise.

However, Jesper Fels Birkelund points out that children generally receive some general skills from their upbringing and parents. A human and cultural 'capital' that helps them later in life.

"They may have been instilled with a particular entrepreneurial spirit or learnt to thrive in certain professional environments. They may also have developed certain skills while growing up. For example, you could imagine that the children of engineers might have played more with technical toys than others. The study can't pinpoint the exact mechanisms, but it suggests that there's more at play than just nepotism".

See the study: Economic returns to reproducing parents' field of study