Family Matters:The Economics of the Family and Human
Capital in the United States
Heather BousheyCenter for American Progress, Washington, DC &
Institute for Public Policy Research, London
June 20th, 2013
“If the United States had in recent years closed the gap between its educational achievement levels and those of better-performing nations such as Finland and Korea, GDP in 2008 could have been $1.3 trillion to $2.3 trillion higher. This represents 9 to 16 percent of GDP.”
Source: (McKinsey & Company 2009, 5).
Today’s talk
1. What has happened to U.S. families in terms of income and hours of paid employment?
2. What we know from the literature about how these trends affect human capital for development of human capital?
3. What do this all mean for policymakers?
Bottom fifth Second fifth Middle fifth Fourth fifth Top fifth Top 5 percent-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2.5
2.2
2.4 2.4
2.2
1.9
-0.4
0.0
0.2
0.6
1.2
1.8
Annual Rate of Income Growth, by income quintile, 1948-2010 1947-1979 1979-2011
Income quintile
Ann
ual r
ate
of in
com
e gr
owth
Note: Data are for money incomeSource: Economic Policy Institute analysis of Current Population Survey Annual Social and Economic Supplement, Historical income Tables (Table F-3, F-2, F-5), 2013.
Bottom fifth Second fifth Middle fifth Fourth fifth 80th–<95th percentile Top 5 percent
-100
0
100
200
300
400
500
600
700
Change in annual hours of paid employment, married men and women, by income quintile, 1979 to 2010
Married women Married men
Annu
al h
ours
of p
aid
empl
oym
ent
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%Share of mothers who are breadwinners or co-breadwinners,
1967 to 2011
Co-breadwinner mothersBreadwinner mothers
Perc
enta
ge
1967 2011
22.5
41.0
15.9
11.6
Source: Author and Jeff Chapman's analysis of Miriam King, Steven Ruggles, J. Trent Alexander, Sarah Flood, Katie Genadek, Matthew B. Schroeder, Brandon Trampe, and Rebecca Vick. Integrated Public Use Microdata Series, Current Population Survey: Version 3.0. [Machine-readable database]. Min -neapolis: University of Minnesota, 2010.
27.5
63.5
Bottom fifth Second fifth Middle fifth Fourth fifth Top fifth Top 5 percent
-5.0-7.5
-10.7-7.8
-5.7
-0.3
12.4
17.2
23.3
19.2 18.1
12.2
0.4
-1.4-4.5
-1.2-4.1
-1.3
-10.9-14.1
-17.0 -16.1-14.6 -15.3
Percentage point change in employment status, mothers, 1979-2007
Nonworker Full-time, year round Part-time, year round Part of the year
Source: Authors' analysis of the Current Population Survey Annual Social and Economic Supplement microdata
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
1963
1962
1961
1960
1959
1958
1957
1956
1955
1954
1953
1952
1951
1950
1949
1948
1947
0
50
100
150
200
250
Cum
ulati
ve p
erce
nt c
hang
e si
nce
1949
Source: Author's analysis of data from the U.S. Census Bureau, Historical Income Tables, Table F7.
For couples with a working wife, income has grown by 83 percent since 1972, but stayed the same for those without a working wife
Growth in median income for married-couple families, by whether the wife works, 1947-2010
Wife in paid labor forceTrend in married-couple
income growth, 1947-1973
Wife not in paid labor force
Bottom fifth Second fifth Middle fifth Fourth fifth Top fifth Top 5 percent0
10
20
30
40
50
60
21.3
33.6
39.7
48.7
42.941.2
14.5
38.8
52.555.2
56.7
51.2
5.5
23.8
43.6
55.954.2
50.4
Married couples with children with both spouses working 35 hours/week or more, by income quintile 1979, 2007, and 2011
1979 2007 2011
Shar
e of
mar
ried
coup
les w
ith ch
ildre
n
Income quintile
Source: Authors' analysis of the Current Population Survey Annual Social and Economic Supplement microdata
Paid Family Leave Paid Sick Days Paid Vacation Paid Personal Leave Short-term Disability Insurance
4
21
38
11 13
5
32
51
18 1610
66
84
4135
12
74
90
4346
19
8589
56 57
21
8790
58 60
Share of U.S. workers with various forms of employer-provided workplace flexibility, by average wage, 2011
Lowest 10 percent Lowest 25 percent Second 25 percentThird 25 percent Highest 25 percent Highest 10 percent
Traditional flextime
Daily flextime
Control in scheduling hours
Time off for personal matters
Supervisors accommodate them for personal business
Some paid time off for personal illness
Parents allowed days off to care for sick child without losing pay or vacation
Allowed to work some regular paid hours at home
Decide when to take breaks
Full-time employees could work part-time in same position
33
12
36
62
89
39
24
4
33
54
45
26
35
63
93
79
54
11
57
34
Share of workers with access to flexible work arrangements, by low-wage and medium- and high-wage employees, 2002
Medium- and high-wage employees Low-wage employees
Source: James T. Bond and Ellen Gallinsky, "What Workplace Flexibility Is Available to Entry-Level, Hourly Employees?," (Families and WorkInstitute, 2006), available at http://familiesandwork.org/site/research/reports/brief3.pdf.
Delivering tomorrow’s human capital (i.e., child development)
1. Income matters for child development2. What happens before children enter school
matters—maybe even more than what happens later in life
3. Family matters – but what does this mean for economics?
1. Money matters• Achievement gap between high and low income groups is
30 to 40 percent larger for children born in 2001 than among those born twenty-five years earlier (Reardon 2011)
• $1,000 increase in income raises combined math and reading test scores by 6 percent of a standard deviation in the short run (Dahl, Gordon B. and Lochner, Lance 2012)
• College and mobility (Bailey and Dynarski 2012; Fox, Connolly, and Snyder)
• Money may mediate negative effects of employment, especially for low-income families
Low Income Middle Income High Income0
10
20
30
40
50
60
70
80
37
30
8
21
51
29
47
74
College Completion by Income Status and 8th Grade Test Scores, 2005
Low Score Middle Score High Score
Shar
e co
mpl
eting
colle
ge
Note: Low income is defined as the bottom 25%, middle income middle 50%, and high income is top 25%.Source: Mary Ann Fox, Brooke A. Connolly, and Thomas D. Snyder, "Youth Indicators 2005: Trends in the Well-Being of AmericanYouth," (Washington, DC: U.S. Department of Education, 2005); See also .Elise Gould, “High-scoring, low-income students no more likely to complete college than low-scoring, rich students,” The Economic Policy Institute Blog, March 9, 2012, available athttp://www.epi.org/blog/college-graduation-scores-income-levels/.
Lowest quartile 2nd quartile 3rd quartile Top quartile0
10
20
30
40
50
60
70
9
21
32
54
5
1417
36
Share of students completing college, by income quartile and birth year
1979 to 1982 birth cohorts 1961 to 1964 birth cohorts
Shar
e Co
mpl
eting
Col
lege
Income quartile
Source: Martha Bailey and Susan Dynarski, "Gains and Gaps: Changing Inequality in U.S. College Entry and Completion" (2012).
2. The pre-kindergarten years matter
• High/Scope Perry Preschool –123 African American children in pre-school in the late 1960s (Schweinhart et al. 2005)
• Project STAR – 11,571 kindergarten to third graders in Tennessee from 1985-89 (Chetty et al. 2011)
• Carolina Abecedarian Study – 112 “at-risk” children in 1972 (Masse and Barnett 2002)
“It may seem counterintuitive, but schools don’t seem to produce much of the disparity in test scores between high- and low-income students. We know this because children from rich and poor families score very differently on school readiness tests when they enter kindergarten, and this gap grows by less than 10 percent between kindergarten and high school. (Reardon 2013).
Source: Ramey & Ramey (2010). Estimates from time use surveys; means are for ages 25 to 34.
Source: Ramey & Ramey (2010). Estimates from time use surveys; means are for ages 25 to 34.
3. Family matters“The conventional wisdom espoused by most politicians, educated laypersons and even many academics places formal educational institutions in a central role as the main producers of the skills required by the modern economy. It neglects the crucial role of families and firms in fostering skill and the variety of abilities required to succeed in the modern economy. Popular discussions of skill formation almost always focus on expenditures in schools or on educational reforms and neglect important non-institutional sources of skill formation, which are equally important, if not more important, producers of the varieties of skills that are useful in a modern economy” (Heckman 1999, 2). [emphasis added]
“high quality early childhood interventions foster abilities and that inequality can be attacked at its source. Early interventions also boost the productivity of the economy.“ (Heckman 2008, 5)
“Large bodies of research have shown how poor health and nutrition inhibit child development and learning and, conversely, how high-quality early childhood and preschool education programs can enhance them. We understand the importance of early exposure to rich language on future cognitive development. We know that low-income students experience greater learning loss during the summer when their more privileged peers are enjoying travel and other enriching activities. Since they can’t take on poverty itself, education policy makers should try to provide poor students with the social support and experiences that middle-class students enjoy as a matter of course.”
-- Helen F. Ladd and Edward B. Fiske, New York Times, 2011