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

Francesco Agostinelli () and Giuseppe Sorrenti
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Francesco Agostinelli: Arizona State University

No 2018-017, Working Papers from Human Capital and Economic Opportunity Working Group

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.

Keywords: Child Development; family income; maternal labor supply (search for similar items in EconPapers)
JEL-codes: H24 H31 I21 I38 J13 J22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lma
Date: 2018-03
Note: ECI
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http://humcap.uchicago.edu/RePEc/hka/wpaper/Agosti ... 18_money-vs-time.pdf First version, March 10, 2018 (application/pdf)

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