Income inequality has substantially increased in recent times in the US and around the world. Research has also shown that higher inequality has changed parenting styles: many parents spend a lot of time and effort pushing their children harder to ensure that they have a better path to security and success. The rising intensity of parenting has resulted in a growing "parenting gap" between rich and poor families. Given that parenting is a key determinant of skill formation, the parenting gap puts social mobility and the American ideal of equal opportunity for all at risk. This research project will study how economic inequality and parenting decisions interact to shape skill acquisition of high school children. For these children, the direct influence of their parents is usually less important than those of their peers in schools and neighborhoods. Parents, however, continue to play an important role through their impact on peer selection. For instance, parents can choose where to live, which school children attend, and can encourage or discourage particular types of friendships. This research project will study how peer formation and parenting behavior evolve in a world of growing economic and residential segregation, how these factors affect child development across different socio-economic groups, and how they shape the effects of policies designed to narrow the parenting gap. The goal is to identify the mechanisms underlying the vicious circle between inequality, segregation, and parenting gaps, and to assess how public policy should be designed to pursue the ideal of equal opportunity for all. The results of this research will provide guidance on policies to increase human capital formation while decreasing inequality, thus lead to faster economic growth and poverty reduction.
This research examines the connections between parenting behavior, neighborhood characteristics, and children's peer group formation from both empirical and theoretical perspectives. The proposed research aims to go into the black box of parenting decisions, going beyond investment in children's human capital to study the different strategies parents may adopt to influence their children's behavior. The research characterizes empirical relationships between parenting, peer groups, and neighborhood and family characteristics using a variety of data sets, including the Add Health, PSID-CDS, and ACS. Building on the empirical results, the project will develop and estimate economic models that capture the interactions between parents' behavior, children's behavior, and the environment. The use of structural models will make it possible to assess the implications of alternative policy scenarios for the evolution of parenting styles, social mobility, residential segregation, and economic inequality. A combination of empirical work with economic modeling is especially promising given that neighborhood and peer interactions give rise to externalities and general equilibrium effects, which are difficult to account for without an explicit model of decision making and equilibrium interactions. Examples of policies to be examined are school choice policies (e.g., the use of neighborhood schools versus selective enrollment schools), affordable housing policies supporting poor families with children, desegregation busing policies, and policies that directly promote mobility of disadvantaged families from poorer to richer neighborhoods. The results of this research will provide guidance on policies to increase human capital formation, thus lead to faster economic growth and poverty reduction.