Abstract: Genetic endowments and parental investments are two key ingredients for producing skills in children. This project lays out a behavioral model where parents allocate investments among children with both equality and efficiency in mind. If endowments and investments are complements in producing skills, efficiency considerations would push parents to investment more in children with better genetic endowments. On the other hand, parents may prefer to reduce inequality in child skills at the expense of efficiency and hence invest more in the child with worse genetic endowments. Using data from the Wisconsin Longitudinal Study, I estimate the model and quantify these two forces, shedding light on how parents make investment choices. I investigate heterogeneity in the relative strength of these two considerations by family SES, parental education, and other observable parental traits. The results have implications for the interplay between parental investment choices and external increases in child investments through policy interventions such as Head Start.

Lunch Lecture Registration: https://humcap.formstack.com/forms/kegon_tan_lecture_registration