Changing Families: Family Relationships, Parental Decisions and Child Development

Marc Chan and Kai Liu

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

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.

Date: 2023-02-06
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Working Paper: Changing Families: Family Relationships, Parental Decisions and Child Development (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2315

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