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Changing Families: Family Relationships, Parental Decisions and Child Development

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  • Chan, M. K.
  • Liu, K.

Abstract

We develop a tractable economic model to study the impact of family structure on children's cognitive and non-cognitive outcomes. Using panel data on both biological parents' behavior irrespective of subsequent relationship status, social fathers, and a set of exclusion restrictions, we identify the joint unobserved heterogeneity of the parents in our choice model, and examine child skill formation via a control function approach. Investments made by high-ability fathers carry positive and significant returns, whereas low-ability fathers may generate negative returns. Hence, policies that incentivize family formation should consider the quality of the fathers which mothers are cohabited with.

Suggested Citation

  • Chan, M. K. & Liu, K., 2023. "Changing Families: Family Relationships, Parental Decisions and Child Development," Janeway Institute Working Papers 2306, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camjip:2306
    Note: kl450
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