Families and governments are the primary sources of investment in children, providing access to basic resources and other developmental opportunities. Recent research identifies significant class gaps in parental investments that contribute to high levels of inequality by family income and education. State-level public investments in children and families have the potential to reduce class inequality in children’s developmental environments by affecting parents’ behavior. Using newly assembled administrative data from 1998 to 2014, linked to household-level data from the Consumer Expenditure Survey, we examine how public-sector investment in income support, health, and education is associated with the private expenditures of low- and high-SES parents on developmental items for children. Are class gaps in parental investments in children narrower in contexts of higher public investment for children and families? We find that more generous public spending for children and families is associated with significantly narrower class gaps in private parental investments. Furthermore, we find that equalization is driven by bottom-up increases in low-SES households’ developmental spending in response to progressive state investments of income support and health, and by top-down decreases in high-SES households’ developmental spending in response to universal state investment in public education.
Incomplete markets and parental investments in children
