A new study shows that rising income inequality in the U.S. has led affluent parents to increase spending on their children, widening the gap in child investment along class lines. The results suggest that income inequality erodes the equality of opportunity by increasing gaps between children from a young age.
Researchers from University of California-Berkeley and Colorado State University found that as income inequality rose in the United States, rich families tended to spend more money on lessons for their children, high-quality childcare, and education, widening class gaps in investment in children by household income and parental education.
“The idea that income inequality might matter for social outcomes is not new. But, one thing we’re doing that is innovative is that we ask if the consequences might vary by social class,” said Daniel Schneider, professor of sociology at UC-Berkeley and co-author of the study.
“We find that is absolutely the case – affluent people came to make much larger financial investments in children as income inequality rose. And we know that parental investment of money and time in their children is a key pathway to pass advantage on across generations,” said Schneider.
The researchers also examined why rising income inequality led to wider class gaps in parental investment. The study found that rising income inequality not only leaves the rich with more money to spend on their children, but also reshapes parents’ preferences toward investing larger portions of their money in children.
“Affluent parents might see rising income inequality as really making a winner-take-all economy and feel a strong push to give their kids every advantage they can,” according to Schneider.
The study, “Income Inequality and Class Divides in Parental Investments,” in the June 2018 issue of the American Sociological Review, uses more than three decades of micro-data from the Consumer Expenditure Survey and the American Heritage Time Use Survey to examine the relationship between income inequality and class gaps in parental investment of time and money in children.
- Income inequality may lay a foundation of unequal investment in children that could result in differential adult attainment.
- When inequality is higher, the share of income spent on investment in children by high-income-rank households is higher.
- High income parents are not simply spending more in general with rising inequality but are targeting their expenditures toward investment in children.
- Even in the face of considerable time pressures, high income parents did not reduce their time investments in children
“Income Inequality and Class Divides in Parental Investments” is by University of California-Berkeley scientists Daniel Schneider and Joe LaBriola and Colorado State University researcher Orestes P. Hastings.