The Price of Parenting: Wealth, Race and Financial Activities for Children, 1998-2016

• In Event: 3148 - Parenthood I: Racial Socialization and Parenting Decisions

Abstract

Wealth inequality increased dramatically over the past decades in the United States (Pfeffer and Schoeni 2016), and it increased the most for families with children, compared to any other type of households (Gibson-Davis and Percheski 2018). Why is that the case? In this paper, we focus on various financial activities that families engage in for the sake of children, which potentially lessen or augment intergenerational wealth differences. We attempt to understand trends over time and also to compare these financial activities of parents for children across the wealth distribution and ethno-racial groups. While researchers have studied expenditures for children (Bianchi et al. 2004; Kornrich and Furstenberg 2013; Schneider, Hastings and LaBriola 2018), we call for a more comprehensive analysis of the economy of parenting to examine financial investment, savings, and debt for the sake of kids. We argue that over the past decades, families with children have become increasingly engaged in financial activities of investment, saving, and borrowing for children, but the types and amounts linked to these financial activities vary substantially across the wealth distribution and by race and ethnicity. Using the 1998-2016 Survey of Consumer Finances data, we show that families increasingly practice financially intensive parenting, or engagement in monetary investment, saving, and borrowing for children, However, over time, White families above median wealth accumulate more financial assets and education savings as well as less education debt for children. In contrast, Black and Hispanic families across the wealth distribution have lower financial assets and savings for children but hold education debt, which is the highest for Black families. These findings suggest that well-intentioned financial investment in children will contribute to the widening of wealth and racial inequalities in the United States, especially between wealthy White child households and Black child households.

Authors

• Nina Bandelj, University of California-Irvine

• Angelina Grigoryeva, University of Toronto