Three Essays on Family Economics and Early Childhood Development

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Virginia Tech

This dissertation consists of three essays studying the effects of collective household decisions on early childhood development from both empirical and theoretical perspectives. The first chapter outlines the dissertation, by presenting the motivations, methods, conclusions, and policy implications for the entire dissertation.

Chapter two examines early childhood development using a collective model with children's cognitive production. We jointly estimate the home input demand with children's cognitive production functions based on a simultaneous equations model. Biases are considered that are caused by the non-random selection of time inputs and possible correlations across inputs and outcomes functions. A direct measure of time inputs relying on children's time diaries from the Child Development Supplement of the Panel Study of Income Dynamics (PSID-CDS) has been constructed. We thereby relax the assumption that there is no difference between parental time spent on children and leisure. Our results show that parental time inputs, especially the active time interacting with children's daily activities, have substantial effects on both children's math and reading test scores. The time inputs vary across parents' age, race, and eduction levels.

In chapter three, we conduct a standard Blinder-Oaxaca decomposition to evaluate the role of home inputs in the black-white test score gaps based on the empirical model presented in chapter two. Aside from the finding that children's ability accounts for a large proportion of the differences, we find that home inputs can also explain a significant portion of the gap. When the maternal time is equalized at the average levels of white children, the racial differences in children's reading and math test scores can be closed by approximately 30%-50%.

The last chapter extends a collective model with household production to the general equilibrium framework. We concentrate on the impacts of a global bargaining power shift within the household on children's cognitive achievement, especially on those who live with single mothers. The model shows that a global bargaining power change in favor of the female may not necessarily be beneficial to the children living with their single mothers. An increase of female's market equilibrium wage rate as a result of reduced labor supply by married women may induce single mothers to work longer hours, spend less time with children, and compensate them with more monetary investment compared with the case when the equilibrium wage rate stays constant.

General Equilibrium, Simultaneous Equations Model, Collective Model, Parental Time, Black-White Test Score Gap, Children's Cognitive Development