The paper by Sang Yoon (Tim) Lee, Nicolas A. Roys, and Ananth Seshadri examines the causal effect of parents' education on children's earnings. The authors develop a model of endogenous schooling and earnings to isolate the causal impact of parental education. The model suggests that parents' education positively affects children's earnings but has an ambiguous relationship with children's schooling. Identification is achieved by comparing the earnings of children with the same length of schooling, whose parents have different levels of education. The model also accounts for heterogeneous preferences for schooling and is estimated using data from the Health and Retirement Study (HRS). The empirical results indicate that the positive OLS coefficient obtained by regressing children's schooling on parents' schooling is primarily driven by the correlation between parents' education and children's unobserved preferences for schooling. However, the structural relationship between parents' and children's schooling choices results in an instrumental variable (IV) coefficient close to zero when exogenously increasing parents' education. Despite this, an exogenous one-year increase in parents' education is found to increase children's lifetime earnings by 1.2% on average. The authors argue that the observed positive intergenerational schooling relationships are driven by selection effects rather than causal effects. They find that the causal effect of parents' education on children's earnings is negative, but the overall relationship is positive due to strong selection on preferences. The model also suggests that higher initial human capital still implies higher earnings, leading to a positive causal effect on children's earnings despite the negative level effect on schooling. The paper contributes to the literature on the intergenerational transmission of education and earnings by incorporating insights from a human capital model. It provides a structural framework to separate the causal effect of parental spillovers from selection effects, offering a more nuanced understanding of the complex dynamics between parents' education and children's outcomes.The paper by Sang Yoon (Tim) Lee, Nicolas A. Roys, and Ananth Seshadri examines the causal effect of parents' education on children's earnings. The authors develop a model of endogenous schooling and earnings to isolate the causal impact of parental education. The model suggests that parents' education positively affects children's earnings but has an ambiguous relationship with children's schooling. Identification is achieved by comparing the earnings of children with the same length of schooling, whose parents have different levels of education. The model also accounts for heterogeneous preferences for schooling and is estimated using data from the Health and Retirement Study (HRS). The empirical results indicate that the positive OLS coefficient obtained by regressing children's schooling on parents' schooling is primarily driven by the correlation between parents' education and children's unobserved preferences for schooling. However, the structural relationship between parents' and children's schooling choices results in an instrumental variable (IV) coefficient close to zero when exogenously increasing parents' education. Despite this, an exogenous one-year increase in parents' education is found to increase children's lifetime earnings by 1.2% on average. The authors argue that the observed positive intergenerational schooling relationships are driven by selection effects rather than causal effects. They find that the causal effect of parents' education on children's earnings is negative, but the overall relationship is positive due to strong selection on preferences. The model also suggests that higher initial human capital still implies higher earnings, leading to a positive causal effect on children's earnings despite the negative level effect on schooling. The paper contributes to the literature on the intergenerational transmission of education and earnings by incorporating insights from a human capital model. It provides a structural framework to separate the causal effect of parental spillovers from selection effects, offering a more nuanced understanding of the complex dynamics between parents' education and children's outcomes.