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Childrens outcomes and family background Claire Crawford Introduction UK has relatively low intergenerational mobility Correlation between parents and childrens income is relatively high Intergenerational elasticity of 029 for those born in Britain in 1970 ID: 448816

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Slide1

Children’s outcomes and family background

Claire CrawfordSlide2

Introduction

UK has relatively low intergenerational mobilityCorrelation between parents and children’s income is relatively highIntergenerational elasticity of 0.29 for those born in Britain in 1970 (

Blanden et al, 2005)Circumstances into which you are born heavily influence future incomeGovernment would like to improve life chances of children in poverty

Child Poverty Act (2010)

Review on Poverty and Life Chances

How can we improve life chances?

If the link between income across generations is causal, then increasing parents’ incomes today should lead to higher income for their children in future

Of course parental income may not be the only factor that is causally related to children’s future income (or well-being)Other family background characteristics (e.g. Parents’ education, marital status)

Other factors (e.g. Health) – not dealt with today

An aside on causality . . .

What do we mean by causal?Certainty that changing a particular factor of interest causes

(rather than is simply correlated with) a change in the outcome of interestImportant distinction, because we really only want to base policy decisions on causal

(rather than

correlational

) relationships

How can we improve life chances?

If the link between income across generations is causal

, then increasing parents’ incomes today should lead to higher income for their children in futureOf course parental income may not be the only family background characteristic that is causally related to children’s future income

Others include parents’ education and marital status

Evidence on causal relationships

Can be difficult to find evidence of direct causal relationships between (e.g.) parent and child income, not least because of need for long time lags between observationsCan instead piece together evidence in two stages:Establish causal links between outcomes in childhood and later in life

Establish causal links between parental income (and other family background characteristics) and child outcomes

Link between outcomes in childhood and later life

Evidence of causal relationship between children’s educational attainment and their future incomee.g. Blundell et al (1999) suggest that the gross rate of return to an additional year’s education in the UK is 5-10%Also some evidence of causal link between childhood cognitive and non-cognitive skills and a range of adult outcomes

e.g. Heckman et al (2006) for the US; Carneiro et al (2008) for the UK

Suggests improving educational attainment and skills amongst poor children is key to improving future labour market outcomes

Other outcomes also relevant for wider well-being, e.g. health

Link between family background and child outcomes: focus on parental income

Some evidence of causal relationship between parental income and children’s educational attainmente.g. Blanden

& Gregg (2004) suggest that a one third fall in household income (around £7,000) reduces the probability of getting a degree by around 5 percentage points (ppts)e.g. Chevalier et al (2005) suggest that a doubling of father’s income increases the likelihood of post-compulsory education by 14

ppts

Suggests that policies which focus on increasing parents’ income are likely to improve children’s life chances - although such sizeable income changes may be beyond the scope of policymakers to provide

Link between family background and child outcomes: focus on parental education

Also of causal link between parents’ and children’s educatione.g. Chevalier (2004) suggests that each additional year of parental education increases the probability of staying on in post-compulsory education by up to 8

ppts (although estimates are insignificant)Chowdry et al (2008) also suggest that parental education increases GCSE attainment (although again estimates are insignificant)

Suggests that improving educational attainment amongst today’s children will also have benefits for the next generation

Link between family background and child outcomes: focus on marital status

What about other family background characteristics?Evidence from UK and elsewhere that children born to married parents have better cognitive and behavioural outcomes than children born to cohabiting parents

Conservatives’ proposal to support marriage through the tax system presumably based on such evidence

But do these gaps reflect a causal effect of marriage on child outcomes? Or do they simply reflect the fact that different sorts of people choose to get married (selection effect)?

Recent IFS research tries to shed light on this issue . . .

Difference in outcomes between children of married and cohabiting parents at birth

Aside: how does this gap compare to others? Slide13

Aside: how does this gap compare to others? Slide14

Link between family background and child outcomes: focus on marital status

What about other family background characteristics?

Evidence from UK and elsewhere that children born to married parents have better cognitive and behavioural outcomes than children born to cohabiting parentsConservatives’ proposal to support marriage through the tax system presumably based on such evidence

But do these gaps reflect a causal effect of marriage on child outcomes? Or do they simply reflect the fact that different sorts of people choose to get married (selection effect)?

Recent IFS research tries to shed light on this issue . . .

Aim of research

To provide a best estimate of the causal impact of marriage on child outcomes by eliminating that part of the gap due to selection

i.e. take account of the fact that people who choose to get married are different from those who do notInterpret the remaining gap as the causal effect

of marriage

Need to strike a careful balance in terms of controls:

“Over-control” and you risk

under-estimating

the effect of marriage

“Under-control” and you risk

over-estimating

the effect of marriage

Data

Millennium Cohort StudyWe use a sample of around 10,000 children, born to married or cohabiting couples (i.e. we exclude lone parents)Marital status measured at birth70% married; 30% cohabiting

Outcomes:Cognitive development measured using vocabulary component of British Ability Scales (BAS) at ages 3 and 5Social and behavioural development measured using mother-reported Strengths and Difficulties Questionnaire (SDQ) at ages 3 and 5

Controls

Three key groups of variables:© Institute for Fiscal Studies

Group 1

Group 2

Group 3

Reflect

sort of person that chooses to get married

Very likely

Likely

Possible

Affected by marriage

Unlikely

Possible

Likely

Examples...

Ethnicity;

religion

Education;

occupation; housing tenure; income

Relationship

stability; parenting practices

We believe that controlling for groups 1 and 2 is the right balance to strike to identify the causal effect of marriage.

But debatable . . .Slide18

Who cohabits rather than marries?

Cohabiting parents are more likely than married parents to:Be White or Black Caribbean

Be of no religionBe low qualified Be home renters rather than homeowners

Groups 1 and 2

Be teenagers at birth of first child

Have lived together for short time

Report that the pregnancy was unplanned

Exhibit lower relationship quality (at 9 months)

They are also more likely to:

Have poorer maternal mental health (at 9 months)

Have lower paternal involvement with baby (at 9 months)

Group 3

Be less likely to set regular bedtimes (at age 3)

Explaining difference in outcomes between children born to married vs. cohabiting parents

Outcome

BAS (age 3)

-0.101

-0.155

0.008

0.065

0.041

0.048

SDQ (age 3)

-0.325

-0.316

-0.187

-0.129

0.068

-0.039

BAS (age 5)

-0.192

-0.229

0.056

-0.017

-0.049

-0.044

SDQ (age

-0.301

-0.291

0.176

0.125

0.086

-0.054

A controls

for the child’s month and year of birth

B also controls

for

other’s ethnicity, immigration status

and religion

C also

controls for

ducation and socio-economic classification of the parents

also

controls for

household income, tenure and work at

9 months

E also controls for family

structure at 9 months

F also controls for relationship quality

at 9 monthsSlide20

Summary: impact of marital status on child outcomes

Small gap in cognitive ability at ages 3 and 5, largely explained by the fact that, compared to married parents, cohabiting parents:

Have lower educationHave lower occupational statusHave lower incomeAre more likely to live in social housing

Larger gap in

social and emotional development

at ages 3 and 5, largely explained by the fact that cohabiting parents:

Have lower education

Have lower socio-economic status

Are more likely to have unplanned pregnancies

Report lower relationship quality when their child is 9 months old

Conclusions on marital status

Differences in outcomes between children born to married and cohabiting couples largely reflect differential selection into marriage, rather than a causal effect of marriage itselfOtherwise marriage needs to lead to very significant improvements in parents’ socio-economic status and relationship quality

Suggests that providing a tax incentive to encourage more parents to get married is unlikely to significantly improve child outcomes

Broader conclusions

Policies that improve educational attainment amongst poor children are likely to have long-term pay-offs in terms of increasing life chances amongst this generation and the nextAmongst the family background characteristics I have considered:Increasing parental income or education may help achieve these aims

Encouraging more parents to marry probably will notOf course, there are other ways to raise educational attainment amongst poor children as well

e.g. raising school quality; improving attitudes and behaviours

But causal evidence on the latter much less clear

Clear need for well-designed policy experiments