Here is an excerpt from a ‘neoclassical’ (non-austrian) study into the intergenerational effects of parents income on childs adult income(i.e. when they grow up) done on Israeli data.
http://pluto.huji.ac.il/~msfalkin/DP02-08.pdf
5. Conclusions
Although the intergenerational correlation coefficient for earnings is small in Israel, we
have been able to identify four separate channels through which parents affect their
children. These channels are both direct and indirect. Parents. ability to earn and their
ability learn directly effect their children’s earnings. In terms of the model this happens
because children inherit some of their parents. abilities. The greater is parents. ability to
earn, the greater is their children’s ability to earn, which increases the earnings of
children. The greater is parents. ability to learn, the greater is their children’s ability to
transform education into human capital, which in turn increases their earnings.
Unfortunately, we have not been able to identify separately the ability to earn and the
ability to learn, because both types of ability theoretically may affect education as well
as earnings. Nevertheless, the fact that the estimated residuals derived from education
and earnings functions for parents are statistically significant in the earnings functions
of their children indicates that children inherit their parents. abilities. It should be
emphasized that the contribution of these residuals to the explanation of children’s
earnings is very small, and is only about 1%.
The main effect of parents upon the earnings of their children is indirect, and
occurs through the intergenerational correlation for education. The ability to earn of
parents and their ability to learn affects the educational attainment of their children.
Here too, we cannot identify the separate effects of the ability to earn and the ability to
learn. However, both effects seem to be present. Parents with more learning ability tend
to have children with more learning ability, who in turn acquire more education. Parents
with more earning ability tend to have children with more earning ability. These
children learn more because the return on their education is greater. Parents with more
learning ability have children who are twice blessed. For given education they earn
more because their human capital is greater. However, they will be more educated too,
so they will earn more.
Parents with higher earnings have more educated children. However, the
elasticity is only about 0.07. Parents who earned 10% more will have had children with
0.7% more schooling, which is equivalent to about 0.08 more years of schooling. Since
according to Table 4 the return to a year of schooling is 10%, this means that the
children’s earnings will be only 0.8% higher. The implied parent-children earnings
.multiplier. is therefore only 0.8/10 = 0.08. Note that this effect is causal and is not
confounded by the correlation between the unobserved heterogeneity of parents and
children. This means that a policy intervention that raises parents. earnings by 10% will
raise their children’s earnings by only 0.8%. While small, the effect is not zero as in
Shea (2000). Money matters, but it doesn’t matter much.
More educated parents have more educated children. However, here too the
causal elasticity is very small and is only half the size of the causal earnings elasticity
discussed in the previous paragraph. Parents with 10% more schooling have children
with 0.32% more schooling. The implied parent-children education multiplier is only
about 0.03. This means that a policy intervention that raises parents. education by 10%
will induce an increase of 0.32% in their children’s education, which will increase their
earnings by only 0.03%. This effect is causal and excludes the confounding effect
induced by the correlation between the unobserved heterogeneity of parents and their
children. So both education and money matter, but not by much.