Life course and cohort effects on Chinese parents' investments in their children

Abstract

Background: How parents’ age at the birth of their children (age at parity) affects their investments in the children has not been explored previously. Objective: We examine the effect of parents’ age at parity on the investments in their children by disentangling the overall effect into life-course effect and cohort effect. Methods: Using the 2017 wave of the Chinese Household Finance Survey, we conduct a cross-sectional regression analysis to separately estimate the life-course effect and the cohort effect. Results: We find a positive relationship between parents’ age at parity and investments in their children and a negative relationship between parents’ current age and investments. We also find a negative relationship between investments and parents' age interacted with their age at parity. Conclusions: Parents who gave birth at an older age and those from a younger cohort on average invest more in their children, both financially and in time. Older parents spending more on their children suggests that financial constraints may be another channel, in addition to a biological one, through which having a child at a later age limits total fertility. Contribution: Delay in age at parity and increase in parental investment in children are two prominent social phenomena in many parts of the world. The positive link we find between them suggests that these phenomena, which are often cited as important contributors to the decline in the total fertility rate in many nations, may be reinforcing each other.