Income Inequality Is Widening Class Divides


Income Inequality Is Widening Class Divides

Income Inequality Is Widening Class Divides

Income InequalityA new study shows that rising income inequality has led affluent parents to increase spending on their children, widening the gap in child investment along class lines. The results suggest that income inequality erodes the equality of opportunity by increasing gaps between children from a young age. 

Researchers from UC Berkeley and Colorado State University found that as income inequality rose, rich families tended to spend more money on lessons for their children, high-quality childcare, and education, widening class gaps in investment in children by household income and parental education.

“The idea that income inequality might matter for social outcomes is not new. But, one thing we’re doing that is innovative is that we ask if the consequences might vary by social class,” said Daniel Schneider, professor of sociology at UC Berkeley and co-author of the study.

“We find that is absolutely the case – affluent people came to make much larger financial investments in children as income inequality rose. And we know that parental investment of money and time in their children is a key pathway to pass advantage on across generations,” said Schneider.

The researchers also examined why rising income inequality led to wider class gaps in parental investment. The study found that rising income inequality not only leaves the rich with more money to spend on their children but also reshapes parents’ preferences toward investing larger portions of their money in children.

“Affluent parents might see rising income inequality as really making a winner-take-all economy and feel a strong push to give their kids every advantage they can,” according to Schneider.

Key findings

# Income inequality may lay a foundation for unequal investment in children that could result in differential adult attainment.

# When inequality is higher, the share of income spent on investment in children by high-income-rank households is higher.

# High-income parents are not simply spending more in general with rising inequality but are targeting their expenditures toward investment in children.

# Even in the face of considerable time pressures, high-income parents did not reduce their time investments in children.

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