Changing Families: Family Relationships, Parental Decisions, and Child Development

Marc Chan and Kai Liu

Journal of Labor Economics, 2025, vol. 43, issue S1, S399 - S444

Abstract: We develop a tractable economic framework to study the impact of family structure on children’s cognitive and noncognitive outcomes. Combining a sequential choice model with panel data on both biological parents, irrespective of subsequent relationship status, and on social fathers and a set of exclusion restrictions, we identify the unobserved heterogeneity of biological families and examine child skill formation via a control function approach. Time investments made by high-ability fathers have positive returns, whereas those made by low-ability fathers can generate negative returns. Policies that incentivize family formation should consider the quality of the fathers whom mothers are cohabited with.

Date: 2025
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Working Paper: Changing Families: Family Relationships, Parental Decisions and Child Development (2023)
Working Paper: Changing Families: Family Relationships, Parental Decisions and Child Development (2023)
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