Children’s outcomes and family background

1. Children’s outcomes and family background Claire Crawford

2. Introduction • UK has relatively low intergenerational mobility • Correlation between parents and children’s income is relatively high • Intergenerational elasticity of 0.29 for those born in Britain in 1970 (Blanden et al, 2005) • Circumstances into which you are born heavily influence future income • Government would like to improve life chances of children in poverty • Child Poverty Act (2010) • Review on Poverty and Life Chances

3. 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

4. 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 interest • Important distinction, because we really only want to base policy decisions on causal (rather than correlational) relationships

5. 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 family background characteristic that is causally related to children’s future income • Others include parents’ education and marital status

6. 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 observations • Can 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

7. Link between outcomes in childhood and later life • Evidence of causal relationship between children’s educational attainment and their future income • e.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

8. Link between family background and child outcomes: focus on parental income • Some evidence of causal relationship between parental income and children’s educational attainment • e.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

9. Link between family background and child outcomes: focus on parental education • Also of causal link between parents’ and children’s education • e.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

10. 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 . . .

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

12. Aside: how does this gap compare to others?

13. Aside: how does this gap compare to others?

14. 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 . . .

15. 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 not • Interpret 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

16. Data • Millennium Cohort Study • We use a sample of around 10,000 children, born to married or cohabiting couples (i.e. we exclude lone parents) • Marital status measured at birth • 70% married; 30% cohabiting • Outcomes: • Cognitive development measured using vocabulary component of British Ability Scales (BAS) at ages 3 and 5 • Social and behavioural development measured using mother-reported Strengths and Difficulties Questionnaire (SDQ) at ages 3 and 5

17. Controls • Three key groups of variables: • We believe that controlling for groups 1 and 2 is the right balance to strike to identify the causal effect of marriage. But debatable . . .

18. Who cohabits rather than marries? • Cohabiting parents are more likely than married parents to: • Be White or Black Caribbean • Be of no religion • Be 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)

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

20. 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 education • Have lower occupational status • Have lower income • Are 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

21. 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 itself • Otherwise 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

22. 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 next • Amongst the family background characteristics I have considered: • Increasing parental income or education may help achieve these aims • Encouraging more parents to marry probably will not • Of 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