Children who grow up in more highly educated families have better labor market
outcomes as adults than those who grow up in less educated families, but we do not know
whether this is because education bestows parents with skills that make them better
parents or because unobservable endowments that contribute to the parents’ educational
levels are shared by their children. This paper attempts to improve our understanding of
the causal processes that contribute to intergenerational immobility by exploiting
variation in fathers’ education induced by the World War II G.I. Bill. I use two different
identification strategies, both of which rest on the timing of the war: the G.I. bill had
different effects on different cohorts depending on their likelihood of military service and
the probability that their schooling had been completed before the war began. The two
different strategies establish upper and lower bounds on the causal impact of father’s
schooling: I find that a one year increase in a father’s education reduces the probability
that his child is retained in school by between two to four percentage points. This implies
that parental schooling levels have an affect on children’s outcomes that is independent
of their innate ability and suggests that public policies aimed at increasing educational
attainment may have important intergenerational effects.