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Demography
Published in: Demography 3/2015

01-06-2015

Parental Spending on School-Age Children: Structural Stratification and Parental Expectation

Authors: Lingxin Hao, Wei-Jun Jean Yeung

Published in: Demography | Issue 3/2015

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Abstract

As consumption expenditures are increasingly recognized as direct measures of children’s material well-being, they provide new insights into the process of intergenerational transfers from parents to children. Little is known, however, about how parents allocate financial resources to individual children. To fill this gap, we develop a conceptual framework based on stratification theory, human capital theory, and the child-development perspective; exploit unique child-level expenditure data from Child Supplements of the PSID; and employ quantile regression to model the distribution of parental spending on children. Overall, we find strong evidence supporting our hypotheses regarding the effects of socioeconomic status (SES), race, and parental expectation. Our nuanced estimates suggest that (1) parental education, occupation, and family income have differential effects on parental spending, with education being the most influential determinant; (2) net of SES, race continues to be a significant predictor of parental spending on children; and (3) parental expectation plays a crucial role in determining whether parents place a premium on child development in spending and how parents prioritize different categories of spending.
previous article Family Disruption and Intergenerational Reproduction: Comparing the Influences of Married Parents, Divorced Parents, and Stepparents
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Appendix
Available only for authorised users
Footnotes
1
The PSID consumption data have been validated to be of high quality and correspond well with other external data sets, such as the Consumer Expenditure Survey (Li et al. 2010).
 
2
The majority of children were interviewed in 2003 (61 %), with a small proportion of children interviewed in 2002 (39 %). For simplicity, we will refer to the CDS-II year as 2003 in subsequent text.
 
3
We thank Dr. Robert Schoeni for providing the SAS codes to create family expenditures using the PSID main file used in Charles et al. (Charles et al. 2007a) so that we could check our Stata codes.
 
4
The recommended equivalence scale is (number of adults + (number of children × 0.7))0.7.
 
5
A composite SES is used for descriptive purposes.
 
6
We replace zero spending with $1 so as to include all sample families and individual children in analysis.
 
7
See more details in the appendix.
 
8
We tested the equivalence of estimates for a covariate across quantiles through a simultaneous quantile regression estimation. The bootstrap variance-covariance matrix with 50 replicates (from sqreg in Stata) was used to determine the significance levels.
 
9
We first log transform the absolute value of net worth, which is then assigned the original sign of net worth.
 
10
Families with no expenditures are included by adding $1 to every family’s expenditure.
 
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Metadata
Title
Parental Spending on School-Age Children: Structural Stratification and Parental Expectation
Authors
Lingxin Hao
Wei-Jun Jean Yeung
Publication date
01-06-2015
Publisher
Springer US
Published in
Demography / Issue 3/2015
Print ISSN: 0070-3370
Electronic ISSN: 1533-7790
DOI
https://doi.org/10.1007/s13524-015-0386-1

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