Matthias Doepke Publications

This chapter argues that parenting choices are a central force in the joint evolution of culture and economic outcomes. We present a framework in which parents-motivated by both their children’s future success and their own normative beliefs-choose parenting styles and transmit cultural traits responding to economic incentives. Values such as work ethic, patience, and religiosity are more likely to be instilled when their anticipated returns, economic or otherwise, are high. The interaction between parenting and economic conditions gives rise to endogenous cultural and economic stratification. We extend the model to include residential sorting and social interactions, showing how neighborhood choice reinforces disparities in trust and human capital. Empirical evidence from the World Values Survey supports the model’s key predictions. We conclude by highlighting open questions at the intersection of parenting, culture, and inequality.

What are the effects of school closures during the Covid-19 pandemic on children’s education? Online education is an imperfect substitute for in-person learning, particularly for children from low-income families. Peer effects also change: schools allow children from different socio-economic backgrounds to mix together, and this effect is lost when schools are closed. Another factor is the response of parents, some of whom compensate for the changed environment through their own efforts, while others are unable to do so. We examine the interaction of these factors with the aid of a structural model of skill formation. We find that school closures have a large and persistent effect on educational outcomes that is highly unequal. High school students from poor neighborhoods suffer a learning loss of 0.4 standard deviations, whereas children from rich neighborhoods remain unscathed. The channels operating through schools, peers, and parents all contribute to growing educational inequality during the pandemic.

As children reach adolescence, peer interactions become increasingly central to their development, whereas the direct influence of parents wanes. Nevertheless, parents may continue to exert leverage by shaping their children’s peer groups. We study interactions of parenting style and peer effects in a model where children’s skill accumulation depends on both parental inputs and peers, and where parents can affect the peer group by restricting who their children can interact with. We estimate the model and show that it can capture empirical patterns regarding the interaction of peer characteristics, parental behavior, and skill accumulation among US high school students. We use the estimated model for policy simulations. We find that interventions (e.g., busing) that move children to a more favorable neighborhood have large effects but lose impact when they are scaled up because parents’ equilibrium responses push against successful integration with the new peer group.

An international and historical look at how parenting choices change in the face of economic inequality.

Parents everywhere want their children to be happy and do well. Yet how parents seek to achieve this ambition varies enormously. For instance, American and Chinese parents are increasingly authoritative and authoritarian, whereas Scandinavian parents tend to be more permissive. Why? Love, Money, and Parenting investigates how economic forces and growing inequality shape how parents raise their children. From medieval times to the present, and from the United States, the United Kingdom, Germany, Italy, Spain, and Sweden to China and Japan, Matthias Doepke and Fabrizio Zilibotti look at how economic incentives and constraints—such as money, knowledge, and time—influence parenting practices and what is considered good parenting in different countries.

Through personal anecdotes and original research, Doepke and Zilibotti show that in countries with increasing economic inequality, such as the United States, parents push harder to ensure their children have a path to security and success. Economics has transformed the hands-off parenting of the 1960s and ’70s into a frantic, overscheduled activity. Growing inequality has also resulted in an increasing “parenting gap” between richer and poorer families, raising the disturbing prospect of diminished social mobility and fewer opportunities for children from disadvantaged backgrounds. In nations with less economic inequality, such as Sweden, the stakes are less high, and social mobility is not under threat. Doepke and Zilibotti discuss how investments in early childhood development and the design of education systems factor into the parenting equation, and how economics can help shape policies that will contribute to the ideal of equal opportunity for all.

Love, Money, and Parenting presents an engrossing look at the economics of the family in the modern world.