- Spending on Children across Four Countries:Variation in the Role of Income and Women's Labor Force Participation
Scholars have recently documented inequalities in parents' spending on children in the United States. This article situates these trends cross-nationally by using expenditure data from the United States, Australia, Spain, and Norway. The article investigates differences across countries in the links between household income, female labor force participation, and spending on children. The links between income, female labor force participation, and spending are largest in the United States and smallest in Norway, while Spain and Australia are intermediate cases, suggesting that public provision lessens inequalities in parental spending on children.
Unequal parental spending on children and young adults has recently drawn attention from scholars, because it could lead to lower intergenerational mobility and higher future inequality (Corak 2013; Folbre 2008; Rivera 2016; Schneider, Hastings, and Labriola 2018). In the United States, parental spending on education, childcare, and status and investment goods are more unequal now than forty years ago, largely because spending has increased among parents at the top of the income distribution (Kornrich 2016; Kornrich and Furstenberg 2013). Spending across the income distribution likely varies across countries in part because countries provide different levels of support for children.
To date there is little cross-national research examining parental spending on children (here, defined into young adulthood). Parental spending may [End Page 562] constitute a relatively direct way that rising income inequality could contribute to within-country inequality in children's educational outcomes, because parents' increased incomes may be spent on children. Because countries vary in how they support children (i.e. education and childcare spending, parental leave, tax subsidies, etc.), parents likely spend on their children differently across countries. Most existing evidence on spending on children comes from the United States, where spending on children has grown more unequal (Coley, Sims, and Votrubra-Dzal 2016; Kornrich and Furstenberg 2013). However, the United States stands out among industrialized countries for its low levels of government investment in children. With the exception of means-tested benefits and primary and secondary education, the United States largely avoids direct government expenditures on children (Folbre 2008). In the Organization for Economic Cooperation and Development (OECD) report on social expenditures, Doing Better for Children, the United States ranked in the bottom five for spending on children under the age of six, and in the bottom half of OECD countries for older children (OECD 2009). Rather than provide universal public investments for children, the United States provides tax incentives to parents. This individual-centered approach coexists with class-based differences in investments in children: highly educated and high-income parents spend the most time and money on children's activities, enrichment, and education (Folbre 2008; Kornrich 2016; Lareau 2011).
Other states, particularly Scandinavian welfare states, have generous provision of childcare, education, and services (Gornick and Meyers 2003). This public model is in stark contrast to the U.S. system, in which children are an individual responsibility and children's futures are tethered to parents' economic status. Public investments in children might serve as a substitute for private spending, leading to a weaker link between household characteristics and spending in countries with more public provision. Substitution implies that class-based differences in spending on children will be lower in countries with more public spending, as high-income parents will be less likely to purchase services privately. Alternatively, public provisions may erode, but not eradicate, class-based differences in spending on children, if parents turn to higher priced private alternatives or supplements even in countries with public investment in children (Bray 2007).
This article seeks to shed light on the question of whether the ties between income and parental spending on children vary across four countries with different public types of public provision for children. These countries, Australia, Norway, Spain, and the United States, exhibit substantial variation in how much they invest in children through public childcare, free or low-cost tertiary education, or incentivizing private spending through the tax system. We use data from each of these countries' household expenditure surveys to examine private household spending...