FamilyMacro: Family Decisions and Macroeconomic Outcomes

A family’s decisions about work, savings, and children ripple through the entire economy, yet most economic models treat households as single, unified actors rather than groups where members negotiate and insure each other. FamilyMacro will build new models and gather fresh evidence to capture how these family dynamics shape economic growth, business cycles, and inequality. Current economic models largely ignore that labour supply responses to a recession differ sharply between married women and single men, or that a couple’s consumption may be buffered by one partner’s income when the other loses a job. By incorporating gender, marital status, and intra-family insurance, the project aims to produce more accurate predictions of how the economy behaves during booms and busts. On longer timescales, it will examine how parenting and household conditions affect children’s skills and future earnings, and how very low fertility rates in many wealthy countries could slow economic growth. Finally, it will investigate how “family culture”—the transmission of values and attitudes across generations—contributes to persistent economic inequality and limits social mobility. If successful, the research could reshape the macroeconomic models that central banks, treasuries, and international organisations use to forecast growth, set interest rates, and design tax or welfare policies. It may also inform policies aimed at raising fertility, reducing inequality, or improving children’s life chances.