Parents have a fundamental role in shaping children’s life chances. Yet understanding the way parents choose to raise their children is not easy. Parents’ investment in their children depend on their own preferences, their beliefs, and their available resources. To date we know little about how parents decide to invest in their children, the motives and limitations behind these decisions, and how these decisions are shaped by other key people in their children’s lives—their teachers.
We investigate the determinants of parents’ investment in their children by analyzing parental investment change when their children are assigned to more qualified teachers. We do this in Taiwan’s unique educational system—which legally requires schools to randomly assign teachers to classes. This natural experiment allows us to estimate causal effects of children being assigned to more qualified teachers.
Our results show that parents react to more qualified teachers by making more financial investments in their children. Parents whose children are assigned to a teacher with a postgraduate degree subsequently spend 5.5 percent of a standard deviation more on tutoring for their children. To give context, this is about 10 percent of the large gap in financial investments between parents in the top 5th of the income distribution and the rest. Parents, on average, do not alter the way they discipline their children, their warmth, or their time investments in response to teacher qualifications.
Parent-teacher contact matters; parents increase their financial investments in response to teacher qualifications only if they are in close contact with their child’s teacher. Highly educated parents also react more strongly to teacher qualifications, with larger increases in their children’s tutoring, and there is also some evidence they become warmer parents. We further show that more qualified teachers strengthen parents’ beliefs that student effort is a key driver of student academic achievement. This suggests that the increase in financial investments—which in our context is private tutoring—is a way for parents to increase their children’s study effort.
Finally, we show that teacher qualifications have no effect on students’ standardized test scores. Using data on students’ beliefs, we show that this may be the result of students becoming less motivated and reducing their study effort in response to more private tutoring.
Putting our findings together, we would argue that school inputs such as teacher qualifications may be important for student achievement, but evaluating their net impact on families is complicated. Initiatives that provide additional school resources need to be evaluated taking careful consideration of their impact within families.