Chan, M. K., Liu, K.

Changing Families: Family Relationships, Parental Decisions and Child Development

CWPE2315

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.

Author links: Kai Liu  

PDF: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2315.pdf

Open Access Link: https://doi.org/10.17863/CAM.99018

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