Children are brought up in very unequal family environments, and mounting evidence suggests that those inequalities during childhood are likely to persist and contribute to explain inequalities in later outcomes. In this project, we aim to investigate the processes through which these inequalities in family environments are created and how they impact on the outcomes of children.

It has been widely documented that marital sorting is highly assortative on education, skills and earnings potential, which means that spouses tend to be very similar on these characteristics. This implies that assortativeness in marriage (including cohabitation) contributes to accentuate individual economic inequalities, leading to large inequalities in the home environments in which children are brought up in. The process of divorce or separation is also more frequent among low-income families, which further opens gaps in financial circumstances across families.

In turn, complementarities between parental education and skills for the development of children is expected to reinforce assortativeness in marriage, by making partnering with a high skilled spouse more valuable for those who are high-skilled themselves. It is also expected to lead more skilled parents to invest more in children, to take advantage of these complementarities and potential high returns, further reinforcing inequalities in the environment children are exposed to, and the transmission of inequalities across generations.

The hypothesis we will consider are:
- That parental skills are complementary in developing the skills of children;
- That such complementarities, if they exist, lead to high skilled parents investing more in their children than lower skilled parents, and hence reinforcing socio-economic differences in skills and education achievement of children;
- That such complementarities, and the consequences they have for child development and education, are important in explaining sorting in the marriage market and divorce.

We will then measure the importance of these mechanisms in explaining the transmission of inequalities across generations.