Necessary Reductions or Increased Support? Parental Investments in Children during the Great Recession

  • Authors: Sabino Kornrich, Anna Lunn
  • Date: August 8, 2013
influence the intergenerational transmission of advantage and disadvantage. In this article, we examine the impact of one such event - the Great Recession of the late 2000s - on one potential mechanism of transmission: parents' financial investments in children. Because parents at different points in the income distribution have different resources, they may make different decisions or have different abilities to respond to times of economic hardship and uncertainty. We find that during the Great Recession, parents were less likely to spend on child care and spent less on enrichment goods and services for the home, regardless of their position in the income distribution. For education, however, we find that low-income parents were less likely to spend and that those who did spend spent less than before the recession began. High-income parents were equally likely to spend after the onset of the recession and spent even larger amounts than before.