Projecting the future earnings of a child

New research has been published that confirms earlier studies regarding the use of family background variables to help predict the ultimate educational attainment of a minor. The focus on educational attainment comes from the strong statistical connection between education and earnings. Most available studies have been conducted using USA data. But a recent study by Bruce and Anderson utilized Canadian data to test the relationships.

The primary determinants of a child's ultimate educational attainment were found to be: the educational attainment of both parents, the population of the region in which the child resided (the larger the population, the more likely the child would attain a higher level of education), and whether or not the child lived with both parents. Interestingly, religion, first childhood language, geographic location of birth, and being an only child were not found to be significant determinants of education.

With respect to the application of this research to civil litigation, forensic economists need not guess about a child's likely future educational attainment and, hence, corresponding earnings capacity. The primary determinant (i.e., the educational attainment of both parents) can be used to help make that decision.

Resources:

C. Bruce & C. Anderson, "The Impact of Family Background on Educational Attainment in Canada," Journal of Forensic Economics 18 (2-3), 2005, pp. 125-37.

J. Kane & L. Spizman, "An Update of the Educational Attainment Model for a Minor Child," Journal of Forensic Economics 14(2), 2001, pp. 155-66.

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