Family

Since 1989 fertility and family formation have declined sharply in Central and Eastern Europe and the former Soviet Union. Fertility rates are converging on—and sometimes falling below—rates in Western Europe, most of which are below replacement levels. Concerned about a shrinking and aging population and strains on pension systems, governments are using incentives to encourage people to have more children. These policies seem only modestly effective in countering the impacts of widespread social changes, including new work opportunities for women and stronger incentives to invest in education.

Most public expenditure on childcare in the US is made through a federal program, the Child Care and Development Fund (CCDF), established as part of landmark welfare reform legislation in 1996. The main goal of the reform was to increase employment and reduce welfare dependence among low-income families. Childcare subsidies have been effective in enabling parents to work, but apparently at some cost to the well-being of parents and children.

Inheriting money can be a problem since the new wealth might sap the beneficiaries’ incentive to work. Or it could do the opposite, by facilitating entrepreneurship among those whose ambition to start a business had been stymied by a lack of cash. Recent evidence suggests inheritance-related work disincentives can be strong—unexpected inheritances can matter a lot for early retirement, for example. But where inheritances facilitate self-employment, as some evidence suggests, the labor supply might increase.

Payments at the time of marriage, which are ubiquitous in developing countries, can be substantial enough to impoverish parents. Brideprice and dowry have both been linked to domestic violence against women, and inflation in these payments has prompted legislation against them in several jurisdictions. Marriage payments are often a substitute for investment in female human capital, so from a welfare and policy perspective, they should be prohibited. This highlights the importance of promoting direct economic returns over legal and customary rights.

There is widespread interest in universal early education, both to promote child development and to support maternal employment. Positive long-term findings from small-scale early education interventions for low-income children in the US have greatly influenced the public discussion. However, such findings may be of limited value for policymakers considering larger-scale, more widely accessible programs. Instead, the best insight into the potential impacts of universal early education comes from analysis of these programs themselves, operating at scale. This growing research base suggests that universal early education can benefit both children and families, but quality matters.

What is the role of married women in immigrant households? Their contribution to the labor market has traditionally been considered of secondary importance and studied in the framework of temporary attachment to the labor force to support the household around the time of arrival. But this role has changed. Evidence from major immigrant-receiving countries suggests that married immigrant women make labor supply decisions similar to those recently observed for native-born married women, who are guided by their own opportunities in the labor market rather than by their spouses’ employment trajectories.

The cost of children is a critical parameter used in determining many economic policies. For instance, correctly setting the tax deduction for families with children requires assessing the true household cost of children. Evaluating child poverty at the individual level requires making a clear distinction between the share of family resources received by children and that received by parents. The standard ad hoc measures (equivalence scales) used in official publications to measure the cost of children are arbitrary and are not informed by any economic theory. However, economists have developed methods that are grounded in economic theory and can replace ad hoc measures.