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Money vs. Time: Family Income, Maternal Labor Supply, and Child Development

Author

Listed:
  • Francesco Agostinelli

    () (Arizona State University)

  • Giuseppe Sorrenti

    () (University of Zurich)

Abstract

We study the effect of family income and maternal hours worked on child development. Our instrumental variable analysis suggests different results for cognitive and behavioral development. An additional $1,000 in family income improves cognitive development by 4.4 percent of a standard deviation but has no effect on behavioral development. A yearly increase of 100 work hours negatively affects both outcomes by approximately 6 percent of a standard deviation. The quality of parental investment matters and the substitution effect (less parental time) dominates the income effect (higher earnings) when the after-tax hourly wage is below $13.50. Results call for consideration of child care and minimum wage policies that foster both maternal employment and child development.

Suggested Citation

  • Francesco Agostinelli & Giuseppe Sorrenti, 2018. "Money vs. Time: Family Income, Maternal Labor Supply, and Child Development," Working Papers 2018-017, Human Capital and Economic Opportunity Working Group.
  • Handle: RePEc:hka:wpaper:2018-017
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    Cited by:

    1. Delalibera, Bruno Ricardo & Ferreira, Pedro Cavalcanti, 2019. "Early childhood education and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 98(C), pages 82-104.
    2. Matthias Doepke & Giuseppe Sorrenti & Fabrizio Zilibotti, 2019. "The Economics of Parenting," NBER Working Papers 25533, National Bureau of Economic Research, Inc.
    3. Gian Paolo Barbetta & Giuseppe Sorrenti & Gilberto Turati, 2018. "Multigrading and Child Achievement," DISCE - Working Papers del Dipartimento di Economia e Finanza def065, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

    More about this item

    Keywords

    Child Development; family income; maternal labor supply;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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