Public education tends to crowd out parents’
time and money, but careful policy design may mitigate this
Many countries around the world are making
substantial and increasing public investments in children by providing
resources for schooling from early years through to adolescence. Recent
research has looked at how parents respond to children’s schooling
opportunities, highlighting that public inputs can alternatively encourage
or crowd out parental inputs. Most evidence finds that parents reduce their
own efforts as schooling improves, dampening the efficiency of government
expenditure. Policymakers may thus want to focus government provision on
schooling inputs that are less easily substituted.
Measures of intergenerational persistence can be
indicative of equality of opportunity, but the relationship is not
A strong association between incomes across
generations—with children from poor families likely to be poor as adults—is
frequently considered an indicator of insufficient equality of opportunity.
Studies of such “intergenerational persistence,” or lack of
intergenerational mobility, measure the strength of the relationship between
parents’ socio-economic status and that of their children as adults.
However, the association between equality of opportunity and common measures
of intergenerational persistence is not as clear-cut as is often assumed. To
aid interpretation researchers often compare measures across time and space
but must recognize that reliable measurement requires overcoming important
data and methodological difficulties.
A mix of policies could be the solution to
reducing discrimination in the labor market
Discrimination is a complex, multi-factor
phenomenon. Evidence shows widespread discrimination on various grounds,
including ethnic origin, sexual orientation, gender identity, religion or
beliefs, disability, being over 55 years old, or being a woman. Combating
discrimination requires combining the strengths of a range of
anti-discrimination policies while also addressing their weaknesses. In
particular, policymakers should thoroughly address prejudice (taste-based
discrimination), stereotypes (statistical discrimination), cognitive biases,
and attention-based discrimination.
This is a revision, version 3.
This is a revision, version 3. Most OECD countries spend substantially more on maternity leave
schemes than on early childcare. However, given high tax burdens and rapidly aging
populations, female labor force participation is critically needed. Moreover, it is important
to know whether the main beneficiaries, the children themselves, reap more benefits from one
or the other in the long term. The first cohorts exposed to the introduction or extension of
maternity/paternity leave schemes and subsidized childcare programs have now completed
education and entered the labor market, allowing an investigation of these programs’ long-term
Knowing the real cost of children is important
for crafting better
The cost of children is a critical parameter
used in determining many economic policies. For instance, correctly setting
the tax deduction for families with children requires assessing the true
household cost of children. Evaluating child poverty at the individual level
requires making a clear distinction between the share of family resources
received by children and that received by parents. The standard ad hoc
measures (equivalence scales) used in official publications to measure the
cost of children are arbitrary and are not informed by any economic theory.
However, economists have developed methods that are grounded in economic
theory and can replace ad hoc measures.
A strict policy on fertility effects every
aspect of economic life
The 20th century witnessed the birth of modern
family planning and its effects on the fertility of hundreds of millions of
couples around the world. In 1979, China formally initiated one of the
world’s strictest family planning programs—the “one child policy.” Despite
its obvious significance, the policy has been significantly understudied.
Data limitations and a lack of detailed documentation have hindered
researchers. However, it appears clear that the policy has affected China’s
economy and society in ways that extend well beyond its fertility rate.
Relative costs and family characteristics
determine the effectiveness of different forms of childcare
Increasing population age and low fertility
rates, which characterize most modern societies, compromise the balance
between people who can participate in the labor market and people who need
care. This is a demographic and social issue that is likely to grow in
importance for future generations. It is therefore crucial to understand
what factors can positively influence fertility decisions. Policies related
to the availability and costs of different kinds of childcare (e.g. formal
care, grandparents, childminders) should be considered and promoted after an
evaluation of their effects on the probability of women having children.
Households can benefit from international trade
as it lowers the prices of consumer goods
Imported products tend to have lower prices than
locally produced ones for a variety of reasons, including lower labor costs
and better technology in the exporting country. The reduced prices may lead
to wage losses for individuals who work in the production of a local version
of the imported item. On the other hand, lower prices may be beneficial to
households if the cheaper product is in their consumption basket. These
welfare gains through consumption, on average, are found to be larger in
magnitude than the wage effect for some developing countries.