Investments in young children among low-income families

Abstract

This article examines low-income parents’ monetary investments in their young children, asking how low-income families are able to afford spending on children. We investigate parental spending on child care and on goods in the home that may provide enrichment for young children. We find little evidence that households make spending trade-offs for either type of good. Instead, our results suggest that low-income households that can afford child care may be poor only temporarily and that they spend primarily when they are unable to avoid doing so because of family work patterns. For enrichment goods, parental education is a stronger predictor of spending.