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Intrahousehold resource allocation: do parents reduce or reinforce child ability gaps?
Paul Frijters1, David W Johnston, Manisha Shah
1School of Economics, University of Queensland, Brisbane, Queensland, 4072, Australia, p.frijters@uq.edu.au.
Parents invest more in children with higher cognitive abilities. This differential investment amplifies initial differences in child cognitive ability, impacting developmental outcomes.
Area of Science:
- Child Development
- Behavioral Economics
- Human Capital Theory
Background:
- Understanding parental investment is crucial for child development.
- Previous research has yielded mixed results on whether parents favor high-ability children.
- Endogeneity issues complicate the analysis of ability and investment links.
Purpose of the Study:
- To investigate whether parents invest more or less in high-ability children.
- To provide new empirical evidence using sibling comparisons.
- To address endogeneity concerns in estimating parental investment effects.
Main Methods:
- Utilized sibling difference methods within US families.
- Employed handedness differences as an instrumental variable for cognitive ability differences.
- Compared observed ability and investment variations between siblings.
Main Results:
- Parents invest significantly more in children with higher cognitive abilities.
- A one standard deviation increase in cognitive ability correlates with a one-third standard deviation increase in parental investment.
- Differential parental investments exacerbate existing cognitive ability gaps.
Conclusions:
- Parental investment strategies tend to favor children with higher cognitive abilities.
- These investment patterns reinforce and potentially widen initial disparities in cognitive skills.
- Findings have implications for human capital accumulation and intergenerational mobility.
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