Parental Time, Family Income, and Child Outcomes

Joseph P. Price, Cornell University

Parents face a number of decisions that involve a trade-off between the amount of time and money they can provide their children. This paper estimates the relative impact of parental time and family income on child outcomes. Parents generally allocate resources equally among their children at each point in time but the amount of resources available to distribute changes over time. As a result the first-born child gets more parental time while the second child experiences a higher level of family income at each age. Using this within-family variation in resources received by each child, I find that for the average family an hour of quality parent-child quality interaction produces the same amount of reading achievement as $172 of additional family income. Parental time inputs also decrease measures of behavior problems but neither time nor family income appear to influence math achievement.