Parental Involvement and Children's Development: Can There Be Positive Side Effects?
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A growing body of literature indicates that meaningful time spent with parents has a significant influence on early childhood development, a future accumulation of a wide array of cognitive and non-cognitive skills, and the ultimate success of a child. The theoretical model presented in this article features endogenous fertility and labor supply while distinguishing between various types of parental time spent with children. In this model, parents are subsidized for spending publicly verifiable productive time with their children. It is shown that there are low tax-subsidy rates that would allow policymakers to stimulate the labor supply of the primary caretaker in addition to significantly enhancing children's skills. These unique by-products of human capital accumulation can have important implications both in developed countries with an ageing population and in developing countries with low female labor force participation.