Parental Education and Child Human Capital: Evidence from Indonesia

Abstract: This paper exploits one of the largest school construction programs on record, which took place in Indonesia in the 1970s, to estimate the causal effect of parental education on child human capital. I use variation in program exposure as an instrument for maternal and paternal length of schooling. The results show little evidence of a causal impact of parental education on child health and skills despite strong cross-sectional correlations. Hence, my findings suggest that the strong associations between parental education and child human capital are predominantly due to family background and inherited ability.