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

University of Zurich, Department of Economics, Working Paper No. 273

79 Pages Posted: 22 Jan 2018

Date Written: January 2018

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

JEL Classification: H24, H31, I21, I38, J13, J22

Suggested Citation

Agostinelli, Francesco and Sorrenti, Giuseppe, Money vs. Time: Family Income, Maternal Labor Supply, and Child Development (January 2018). University of Zurich, Department of Economics, Working Paper No. 273, Available at SSRN: https://ssrn.com/abstract=3102271 or http://dx.doi.org/10.2139/ssrn.3102271

Francesco Agostinelli (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Giuseppe Sorrenti

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

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