Historic increases in income inequality have coincided with widening class divides in parental investments of money and time in children. These widening class gaps are significant because parental investment is one pathway by which advantage is transmitted across generations. Using over three decades of micro-data from the Consumer Expenditure Survey and the American Heritage Time Use Survey linked to state-year measures of income inequality, we test the relationship between income inequality and class gaps in parental investment. We find robust evidence of wider class gaps in parental financial investments in children—but not parental time investments in children—when state-level income inequality is higher. We explore mechanisms that may drive the relationship between rising income inequality and widening class gaps in parental financial investments in children. This relationship is partially explained by the increasing concentration of income at the top of the income distribution in state-years with higher inequality, which gives higher-earning households more money to spend on financial investments in children. In addition, we find evidence for contextual effects of higher income inequality that reshape parental preferences toward financial investment in children differentially by class.
This content will become publicly available on March 1, 2025
We provide evidence that violence reduces the adoption and use of mobile money in three separate empirical settings in Afghanistan. First, analyzing nationwide mobile money transaction logs, we find that users exposed to violence reduce use of mobile money. Second, using panel survey data from a field experiment, we show that subjects expecting violence are significantly less likely to respond to random inducements to use mobile money. Finally, analyzing nationwide financial survey data, we find that individuals expecting violence hold more cash. Collectively, this evidence suggests that violence can impede the growth of formal financial systems.
more » « less- Award ID(s):
- 1942702
- PAR ID:
- 10502558
- Publisher / Repository:
- MIT Press
- Date Published:
- Journal Name:
- Review of Economics and Statistics
- Volume:
- 106
- Issue:
- 2
- ISSN:
- 0034-6535
- Page Range / eLocation ID:
- 352 to 369
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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