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Is the Family Essential for Accumulating Human Capital?

Jeffrey Olson

 

Introduction

Single-parent and nontraditional families that are not made up of both biological parents are more socially acceptable in society than they were many years ago. "Projections indicate that one-half or more of the children living in the United States will spend at least part of their childhood in a single parent family (Garasky 1995). It is also estimated that one in four children will live in stepparent families. Do these alternative family structures have negative effects on the outcome of our children? There have been many studies conducted regarding this issue in the past, and social economists have come to the conclusion that children's outcomes are better if they are brought up in traditional nuclear families with both biological parents than alternative family structures.


This paper is divided into five sections. The first section discusses the theories that could explain the notion that alternative families have worse outcomes than children from traditional nuclear families. The second section discusses the results of many case studies that were conducted about the relationship between family and accumulation of human capital. The third section discusses the discrepancies in the case study results. The fourth section discusses policy implications that could change incentives and outcomes. The fifth section will summarize and bring together the entire paper.

Theories

There are many theories regarding the trend that children from alternative families have worse outcomes than children from traditional nuclear families of two biological parents. Sociological theory predicts that children from alternative families get fewer economic, social and cultural resources (Biblarz, 1999, 323). Receiving fewer of these resources hurts the children's accumulation of human capital. Socialization theory stresses the importance of parenting in shaping children's lives. The absence of a parent reduces the amount of support for the children. In the case of a spouse's death or a divorce, the well-being of the single parent is severely impacted and can lead to poor parenting, such as less supervision, parental authoritarianism, and unrealistic expectations. All of these changes in parenting can impede the healthy development of a child. (Biblarz, 1999, 324) Children without fathers are thought to lack a male model of how to be successful in the labor force because the family is the first site where children learn how to get along in society (Biblarz, 1999, 324). In addition, alternative family structures often involve a loss or trauma, such as the death of a parent. These events can hurt the outcome of children in the long term.


Another theory regarding the link between family structure and children's outcomes is the economic theory, which "proposes that socioeconomic success is partly a function of human capital" (Biblarz, 1999, 325). Households act as single units in order to produce the most capital and allocate more investments to the children. The two-parent family is best for the children because it allows one parent to take care of the economic issues and the other to take care of the household issues. Children that are raised in two-parent families have the highest outcomes because both of the parents are present to provide the economic and social resources. Single-parent families, on the other hand, have less income and have less time for household issues. Using the economic theory, children from single-father families will reach higher levels of attainment than children from single-mother families because the fathers will have higher incomes. (Biblarz, 1999)


The evolutionary perspective on the family explains that the mother has a larger role in the outcome of the children than the father. This is based on the premise that mothers invest more of their resources in their children. Because women do not have as many options for having additional children, they care more about the outcome of their children that they have. This theory predicts that children that are living with two biological parents will have an advantage over those from other kinds of families (Biblarz, 1999, 326).


Another explanation for negative children outcomes with alternative families is the selection bias. An example of this would be if people who divorce are less competent at family life. Then, children might have lower outcomes because their parents were not as competent and not because of the actual divorce (Biblarz, 1999, 326).


Marital conflict is an important variable in the effect of the family on children's outcome. The main problem for children is not actually the divorce, but the family conflict that occurs in the household. Marital conflict can be very harmful to the outcome of children in the long run.
The combination of all of these theories supports the idea that the stable traditional family unit is the best form in the modern society for accumulating human capital. It is agreed upon by the majority of social scientists that alternative families are not in the best interest of the children (Biblarz, 1999, 327). However, there are many studies and some theories that give some uncertainty to the notion that alternative families are not in the best interest of the children. Although family structure is not the only determinant to children's outcomes, it is definitely a powerful determinant.

Case Study Results

There are many different case studies that have different results regarding the effect of family structure on children's educational outcomes. The main correlation between family structure and children's educational outcomes is that children who grow up in single-parent or stepparent families obtain lower educational attainment than children that grew up with both biological parents. The correlations on this result depend on the control variables used in the regression. To interpret these correlations in regard to family structure and children's outcomes, the research assumes that the family structure is exogenous. However, it is not exogenous if there are processes that determine the family structure and the children's outcomes.


When mother's employment and occupation are controlled, it is found that children being raised by either both biological parents or a single-mother have higher occupational status and educational attainment than children living with a stepparent or children living with a single father (Biblarz, 1999). Empirical findings show that living with a widowed, divorced, or separated mother has little or no effect on educational attainment with economic status controlled. However, living in a stepfather family has a negative effect on high school graduation rates. (Boggess, 1995, 205) The educational attainment of the children's mother positively affects the children's educational attainment. This could be due to both economic and social affects. A high school education is so important because it reduces the probability of poverty and long-run dependence on welfare.


Children that are raised by both biological parents have a much greater chance of graduating from high school than children from single parent families. The next family dynamic with the greatest probability of graduating from high school after both biological parents is the mother/stepfather family (Garasky, 1995, 7). Socialization theory and economic theory conflict here with regard to the stepfamily. Socialization theory says that the stress from living in a stepparent structure is more detrimental to the children. Economic theory, on the other hand, argues that the resources available from both adults make the stepparent structure preferable to a single parent household.


Boggess, however, in a study in 1998 found no effect of living with a single mother on children's graduation from high school (Boggess, 1998). Among six family types in a 1997 study, the divorced mother was the only type that did not increase the odds of the children dropping out of high school while keeping other variables constant (Biblarz, 1999, 328).
A family structure's impact on a child varies with the type of structure and the age of the child (Garasky 1995). Changes in family structure that occur before age four have positive effects on the chance of children graduating from high school. Changes after age four are detrimental, however, to the chance of children graduating from high school (Garasky 1995).


The number of siblings that children have is negatively related to the children's educational attainment. A family's poverty status is negatively related to children's educational attainment as well. These results are consistent with the economic theory that family resources directly affect children's educational attainment (Garasky 1995).
Some researchers have looked into parental death as a way to examine the effects of family structures on children's outcomes. Research shows that parental death has less of an impact on children's outcomes than parental divorce. In addition, elementary school children whose parents will eventually divorce do not do well in school before the divorce occurs. Other studies, however, find that prior performance to a divorce was not poor for teenagers (Ginther, 2003, 8). This shows that there is not complete consensus in the research on the effect of family structure and children's outcomes.


According to Biblarz, the effect of family structure on children's socioeconomic success has been constant over the past thirty years. In the 1960s and 1970s, the negative effect of being raised by a single mother on a child's educational and occupational achievement could be due to the high rate of unemployment among single mothers. In the 1980s and 1990s, the negative effects of being raised by a single mother could be due to single mothers' jobs of low status. Alternative families were found to have the same effect on males and females (Biblarz, 1999).
However, a study done by Powell and Parcel in 1997 showed that the family's structure impacts the daughter's outcome more than the son's outcome. There is not a substantial negative effect of an alternative family structure for men's education, occupation, and income; however, there are negative effects for women (Biblarz, 1999, 328). There are many discrepancies in the case study results, which cause some uncertainty among the consensus that alternative families have a negative effect on children's educational attainment.

Why the Discrepancy in Case Study Results?

Many studies done are child-based, but family-based classification combines stepchildren and joint biological children into "blended families" (Ginther, 2003, 4). Therefore, the family-based classification can distinguish between children raised in traditional nuclear families and children raised in blended families (Ginther, 2003). The educational outcomes for both types of children in blended families (step children and their half-siblings that are biological children of both parents) are similar to each other and both of these types of children are worse off than children raised in traditional nuclear families (Ginther, 2003, 3). The main distinction is between children brought up in traditional nuclear families and children brought up in other family structures (Ginther, 2003, 3).


Differences between many studies of the effect of family on the accumulation of human capital are due to different decisions regarding which variables are exogenous to the process and also different decisions regarding how to group alternative families. No matter what the controls have been, however, over the past 30 years children from single-father families, father/stepmother families, and mother/stepfather families have had lower achievements than children from two-biological-parent families and single-mother families. (Biblarz, 1999, 322)
With additional controls the effect of the family structure loses statistical significance, especially the effect of living in a single-parent family. It is important to realize that family structure could be endogenous to children's outcomes (Ginther, 2003, 20). Family structure could be related to family resources, which are devoted to children. If descriptive regressions do not control for these variables, family structure will get their effects. It is hard to tell which variables should and should not be included in the regressions.


There are several reasons why additional controls cause a loss in statistical significance. The presence of stepchildren is a source of stress. The roles in these families are not clearly defined, as it might be hard for a stepfather to discipline a stepchild. This stress could affect the outcome of the stepchild and the joint biological children. Another explanation could be the allocation of time and other resources within blended families. A mother, for example, might allocate resources differently to compensate for the negative effects of family structure on the stepchildren (Ginther, 2003, 23).


The literature on the family structure has shown that there are many complicated trends in the data collected. There are stylized facts that show the differences in average outcomes for children that are brought up in various family structures. There are also descriptive regressions that control for the effects of other variables such as mother's education and family income. Controlling for variables decreases the correlation between the children's educational outcome and being raised in a single-parent family (Ginther, 2003, 4). People that promote marriage often use the stylized facts of simple correlations between family structure and children's outcomes. Those people that do not promote marriage use the descriptive regressions that control for other variables. Policy debates rest on the beliefs about structural relationships that are not stylized facts or descriptive regressions (Ginther, 2003, 4).

Policy Implications and Counterfactuals

An example of a policy implication of family structure affecting the accumulation of human capital would be eliminating the "marriage penalty" in the earned-income tax credit, which reduces the taxes that low-income working people pay. With this penalty, tax credit becomes unavailable to two-earner married couples. People that want to promote incentives for marriage on the basis that children who grow up in two-parent families have better educational outcomes advocate removing the EITC marriage penalty. Stylized facts are not evidence that removing the marriage penalty would improve the outcomes of children. (Ginther, 2003)


There are many other policy counterfactuals besides the removal of EITC marriage penalty that could be used to promote marriage, such as the removal of the marriage penalty from the federal income tax, mandatory counseling for couples before marriage or for couples before they divorce, and changes in the laws regarding marriage, divorce, and child support.
In the case of the EITC marriage penalty, if it were removed, the government could finance their decrease in revenue by increasing taxes on people who are not parents. The removal of the EITC marriage penalty encourages the formation and continuation of marriage. The descriptive regressions point to a result where outcomes for children in blended families are not as favorable as outcomes for children in single parent families (Ginther, 2003, 21). The removal of the marriage penalty will benefit some children and harm others (Ginther, 2003, 21). The EITC is affected by both labor markets and marriage markets. If the change in incentives made a significant number of mothers and fathers increase their work hours, the average quality of those marriages might be lower than the average quality of marriages before the removal of the penalty. According to Ginther, "Neither stylized facts nor descriptive regressions provide defensible estimates of even the partial equilibrium effects of eliminating the marriage penalty" (Ginther, 2003, 21).

Conclusion

On average, children raised in traditional nuclear families have better educational outcomes than stepchildren that are raised in stable blended families. Also, children raised in traditional nuclear families have better outcomes than the joint biological children from stable blended families. Therefore, the traditional nuclear family is very important for the accumulation of human capital. There are many important influences on children that could or could not be related to family structure, such as the parents' level of education, income, and time they can spend with the children. Although it is hard to control for all of the variables that are involved in these studies relating the family's structure to the educational attainment of the children, it is clear that the traditional nuclear family with both biological parents plays a significantly positive role. Therefore, it is necessary for society to promote traditional nuclear families in some way and fund programs, such as Head Start, that help children from disadvantaged backgrounds before they reach school age. These programs will help children that are raised in poverty and in alternative family structures where the necessary social and economic resources are not available.

 


References


Biblarz, Timothy J. and Adrian E. Raferty, (1999) "Family Structure, Educational
Attainment, and Socioeconomic Success: Rethinking the "Pathology of Matriarchy", in The American Journal of Sociology, September 1999, Vol. 105, No.2, pp 321-353.

Boggess, Scott, (1998) "Family Structure, Economic Status and Educational Attainment",
in The Journal of Population Economics, Vol. 11, No. 2, (May 1998) pp. 2205-222 (Omit sections 3 and 4).

Ermisch, John F.; Francesconi, Marco (2001), "Family Structure and Children's
Achievements", Journal of Population Economics v14, n2 (2001): 249-270.

Garasky, Steven, (1995), "The Efects of Family Structure on Educational Achievement:
Do the Effects Vary By the Age of the Child?" in The American Journal of Economics and Sociology, January 1995, Vol. 54, No. 1. pp. 89 -106.

Ginther, Donna K., Robert A. Pollak, (2003), "Does Family Structure Effect Children's
Educational Outcomes?" NBER Working Paper, 9628, April 2003.