Academic journal article Journal of Economics and Economic Education Research

Family Background or Characteristics of the Child: What Determines High School Success in Germany?

Academic journal article Journal of Economics and Economic Education Research

Family Background or Characteristics of the Child: What Determines High School Success in Germany?

Article excerpt

INTRODUCTION

Globalization and skill biased technical change have increased the demand for highly skilled workers over the last few decades and led to a widening of the wage differential between high and low-skill workers (see Dustman 2007). In some industries, this leads to excess demand, which cannot be eradicated by the existing workforce in Germany. Low-skill workers are not suitable for filling the demand gap. In 2007, the unemployment rate of 18 % for low-skilled workers in the prime working age was five times higher than the rate for high-skilled workers. By contrast, the unemployment rate was three times higher for unskilled workers in 1999. Therefore, being highly skilled is becoming more and more important for successful integration into the labor market. Not only are wages higher for high-skilled workers, but also the risk of unemployment is lower than for low-skilled workers.

Thus, investment in formal education is extremely important. After completing elementary school (Grundschule), the decision as to which secondary school track to attend--general school (Hauptschule), intermediate school (Realschule) or high school (Gymnasium)--has to be made for ten year old pupils. (1) Thus, the division of pupils between the three school types takes place very early in Germany (see Soskice 1994, Winkelmann 1996 and Dustman 2004 for a detailed description of the German school system). Changes from a lower to a higher school type are very rare. After elementary school, teachers give a recommendation based on grades during elementary school and their personal view of the ability of the pupil, as to which school track is appropriate. Which school pupils will attend depends mainly on the decision of the parents, because children cannot decide on their own and the recommendations of teachers are not binding. (2)

Attending a university or other institution of higher education is possible after successful graduation from high school, which is usually at the age of 18-19. At the age of 15-16, pupils regularly graduate at intermediate school. If their grades are better than 2.5 (equivalent to B-C according to the American system) on average, pupils can choose to attend high school or a technical school. By allowing either of these, they can process to university Pupils who complete general school at the age of 15-16 have to earn an intermediate school equivalent certificate at a special technical school, before joining a program with the prospect of taking a school leaving exam which allows higher education attendance afterwards. Therefore, not only is there a lower level of educational training compared to intermediate and high school pupils at the age 10-15, but even good pupils from general schools also have to overcome high hurdles in order to attend higher education institutions, because their education has not been so thorough. Especially for those pupils who did not start secondary school at the high school level, parental characteristics can account for the probability of graduating with a high school degree or equivalent.

Theoretically, education is an investment in human capital (see Becker 1964 and Mincer 1974). However, for pupils, the decision on how much to invest in human capital may be influenced heavily by their family background. Especially the father or/and mother set incentives for their child to make direct investments in education or other activities which are highly correlated with the level of human capital. However, we are not concerned about the precise manner in which parents influence the decisions of their children. We assume a decisive impact of parental characteristics on the educational attainments of their children. This assumption is supported by the literature which provides strong empirical evidence of such a relationship.

Recently, Dustmann (2004) shows that for Germany, the choice between one of the three school tracks after end of elementary school is influenced heavily by family background, particularly parental class. …

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