Objective and research question

1This study investigates a potential child wealth penalty in France. Using detailed panel data on household wealth, we will first investigate whether the birth of a child impacts the wealth of the household. Second, we will study a potential gendered wealth divergence after childbirth.

Background

2The relationship between children and wealth accumulation is complex. On one hand, the cost of raising a child poses a significant financial burden, leading to a lower capacity for saving among parents. However, having children can also serve as a powerful motivation for savings.

3The literature shows that the association between children and parental wealth is more nuanced. It depends on whether the short-term or the long-term association is considered, and on the position in the wealth distribution.

4Dockery and Bawa (2015) and Scholz and Seshadri (2007) consider a life-cycle perspective, and both find that children have a significant impact on household wealth in the long-run. Van Winkle and Monden (2022) find a complex relationship between the number of children and wealth at retirement age: while large families (4 kids or more) have a larger probability of having zero or negative wealth, having 2 or 3 kids is associated with larger levels of wealth. Using panel data, Maroto (2018) and Ravazzini and Kuhn (2018) focus on the short-term effect of children on parental wealth. Both show that the wealth effects of children vary across different wealth levels and social settings. Maroto (2018) finds that while wealthier families may experience an increase in wealth with the presence of younger children, the costs of raising children often outweigh the motivations for saving, particularly for families at or below the median wealth level. Ravazzini and Kuhn (2018) further supports this, showing that dependent children reduce the probability to save, while planning for a child increases savings. Goda and Streeter (2021) support previous findings, showing that children have a short-term negative impact on parental wealth, but no impact on the long run. They find large heterogeneity of the impact of children, with children having a large short-term negative impact on disadvantaged groups of population (black, and low-SES families) and a small positive impact on more advantaged groups.

5The literature has, however, ignored the potential gendered effects of the impact of children on wealth accumulation. The gender wealth gap is now well documented (Bonnet, Keogh, and Rapoport, 2014; among others), including within households (Frémeaux & Leturcq, 2022). The gender gap in wealth within households is driven by the individualization of wealth, due to changes in the legal ownership of assets (Frémeaux & Leturcq, 2020). While marriage is often associated with a joint ownership of assets, it is now increasingly common to opt out from the default marital regime of joint community of assets and to decide on a separate property regime (Frémeaux & Leturcq, 2018, 2013). Unmarried cohabitation is associated with separate ownership of assets. This family structure has become increasingly common in OECD countries, and the share of babies born from unmarried parents has reached high levels (64% in France)-a phenomenon theorized as the second demographic transition (Lesthaeghe, 2014).

6The literature has documented the child penalty: children have a large negative impact on women’s earnings but not on men’s earnings (Waldfogel, 1997; Kleven et al., 2019). In France, the financial impact of motherhood on women’s labour earnings decreases along the wage distribution (Pora & Wilner, 2019). Whether the child wage penalty translates into a child wealth penalty has not been studied in the literature. We expect a negative impact of children on household wealth. The negative impact of children on wealth should be larger for women than men, especially in the bottom of wealth.

Data

7We use the longitudinal data from the French wealth survey (enquête histoire de vie et patrimoine), conducted by INSEE. It is a rotating panel survey, representative of the French population. Three longitudinal waves are available: the first wave was collected in 2014–2015, the second in 2017–2018, and the third in 2020–2021.

8Focusing on opposite-sex couple-headed stable households, the data include 4,308 households, out of which 763 were followed across 3 waves, and 3,545 across two waves. The latter splits as follows: 1,319 between 2015 and 2018, 2,122 between 2018 and 2021 and 104 between 2015 and 2021-whose interview was probably expected but missing for 2015. 394 of these households followed longitudinally experienced the birth of at least one child over the period. We are currently starting the difference-in-differences analysis, which will consider as a treatment the birth of the n-th child and use (non)-parents with n-1 children as control.