Are grandparents a blessing or a burden? Multigenerational coresidence and child-related spending

Abstract

Economic investments in children may represent a powerful mechanism to explain differences in child outcomes across family types. Unfortunately, evidence on child-related spending across family structures remains poorly understood. Using the Consumer Expenditure Survey (1996–2015), this study is the first to investigate patterns of child-related spending in an increasingly common type of extended family household: multigenerational households, in which children reside with at least one parent and grandparent. This study also contributes to a growing literature giving primacy to parents' socioeconomic disadvantage as moderating the association between multigenerational relationships and child well-being. Results indicate that, when compared to similar two-generation households, multigenerational households are associated with increased spending on education and with decreased spending on child care. Differences in child-related spending between multigenerational and two-generation households differ according to parents' income and relationship status. Overall, living with grandparents represents an adaptive strategy that helps low-income or single parents invest more money in their children's education, hobbies and activities, and to save on the costs of child care.