The impact of biological preferences on parental investments in children and step-children

Abstract

A remarriage typically involves significant changes in a family's financial circumstance, and these changes, combined with the relative bargaining relationship between spouses, likely affect the well-being of the children who are part of the family. In this paper, I use the separate-spheres model, a theoretical model that explains the determinants of bargaining power in marriage, to analyze how a remarried couple's bargaining relationship affects their child investment in stepfamilies. Based on this theoretical model, I build and estimate an empirical model that investigates the determinants of parental investment. As evidence of parental preference for biological children over stepchildren, I find that an increased wage rate of a biological mother significantly improves her child investment when her husband is a stepfather of the child, while there is no such effect for mothers living with the biological father of the child