Parental income shocks and outcomes of disadvantaged youth in the United States
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Government policies that increase the incomes of poor families have been promoted as a way of improving children's life chances on the grounds that children who grow up in rich families tend to have better socioeconomic outcomes as adults than children who grow up in poor families. Yet the process that generates the relationship between parents' incomes and those of their children, though well documented, is not well understood. One possibility is that differences in family income lead to differences in parents' monetary investments in their children. Another is that differences in family income reflect differences in parents' innate characteristics that are passed on to their children.