Genetic Endowments and Lifetime Earnings: Understanding the Mechanisms

Uta Bolt, Eric French, Varu Warrier, Qianyu Yang and Weilong Zhang

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper investigates how genetic endowments influence lifetime earnings using a dynamic life cycle model and longitudinal data from a cohort tracked from birth to retirement. We examine genetic impacts on skill formation as well as choices of parental investments, educational attainment, and occupation. A one standard deviation increase in the polygenic score for educational attainment raises lifetime earnings by 18.9%. Although part of this effect is due to genetic endowments impacting skill formation, the majority is due to genetic endowments impacting choices. Extending our analysis to include polygenic scores for additional traits reveals other channels through which they operate. Furthermore, our estimates show that genetic endowments and investments are substitutes in the production of earnings during early childhood but are complements later in life, highlighting the crucial importance of early-life interventions to effectively mitigate genetic inequalities.

Keywords: Polygenic Scores; Educational Attainment; Life Time Earning; Cognitive Skills (search for similar items in EconPapers)
JEL-codes: C38 I24 J24 (search for similar items in EconPapers)
Date: 2025-07-03
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2547

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