Advanced Search
MyIDEAS: Login to save this paper or follow this series

What Linear Estimators Miss: The E ects of Family Income on Child Outcomes

Contents:

Author Info

Abstract

This paper examines the causal relationship between family income and child out- comes. Motivated by theoretical predictions and OLS results suggesting a nonlinear relationship, we depart from previous studies in allowing the marginal e ects on children's outcomes of an increase in family income to vary across the income dis- tribution. Our nonlinear IV and xed-e ect estimates show an increasing, concave relationship between family income and children's outcomes. By decomposing the linear estimators, we show that the linear estimates miss the e ects of family in-come, because they assign little weight to the large marginal e ects in the lower part of the income distribution.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.uib.no/filearchive/wp02.11_2.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 02/11.

as in new window
Length: 53 pages
Date of creation: 14 Jan 2011
Date of revision:
Handle: RePEc:hhs:bergec:2011_002

Contact details of provider:
Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
Phone: (+47)55589200
Fax: (+47)55589210
Email:
Web page: http://www.uib.no/econ/en
More information through EDIRC

Related research

Keywords: family income; child development; nonlinearities; fixed effects estimation; instrumental variables estimation; linear models;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Gordon B. Dahl & Lance Lochner, 2011. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," Working Papers, Human Capital and Economic Opportunity Working Group 2011-022, Human Capital and Economic Opportunity Working Group.
  2. Anne Case & Christina Paxson, 2006. "Stature and status: Height, ability, and labor market outcomes," Working Papers 27, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  3. Philip Oreopoulos & Marianne Page & Ann Huff Stevens, 2008. "The Intergenerational Effects of Worker Displacement," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 26(3), pages 455-483, 07.
  4. Magne Mogstad & Matthew Wiswall, 2009. "How Linear Models Can Mask Non-Linear Causal Relationships. An Application to Family Size and Children's Education," Discussion Papers, Research Department of Statistics Norway 586, Research Department of Statistics Norway.
  5. Daniela Del Boca & Christopher Flinn & Matthew Wiswall, 2010. "Household Choices and Child Development," Working Papers, Human Capital and Economic Opportunity Working Group 2011-039, Human Capital and Economic Opportunity Working Group.
  6. Angrist, J.D. & Imbens, G.W., 1992. "Average Causal Response with Variable Treatment Intensity," Papers, Tilburg - Center for Economic Research 9234, Tilburg - Center for Economic Research.
  7. Yitzhaki, Shlomo, 1996. "On Using Linear Regressions in Welfare Economics," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 14(4), pages 478-86, October.
  8. Angrist, Joshua & Pischke, Jörn-Steffen, 2010. "The Credibility Revolution in Empirical Economics: How Better Research Design Is Taking the Con out of Econometrics," IZA Discussion Papers 4800, Institute for the Study of Labor (IZA).
  9. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
  10. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 4(3), pages S1-39, July.
  11. Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers 0118, National Bureau of Economic Research, Inc.
  12. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(6), pages 1153-89, December.
  13. Martin Dooley & Jennifer Stewart, 2004. "Family income and child outcomes in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 898-917, November.
  14. Løken, Katrine Vellesen, 2007. "Family income and children's education: Using the Norwegian oil boom as a natural experiment," Working Papers in Economics, University of Bergen, Department of Economics 03/07, University of Bergen, Department of Economics.
  15. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, Econometric Society, vol. 56(4), pages 931-54, July.
  16. Shea, John, 2000. "Does parents' money matter?," Journal of Public Economics, Elsevier, Elsevier, vol. 77(2), pages 155-184, August.
  17. David M. Blau, 1999. "The Effect Of Income On Child Development," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 261-276, May.
  18. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, Econometric Society, vol. 65(3), pages 557-586, May.
  19. Almond, Douglas & Currie, Janet, 2011. "Human Capital Development before Age Five," Handbook of Labor Economics, Elsevier, Elsevier.
  20. Edward Vytlacil & James J. Heckman, 2001. "Policy-Relevant Treatment Effects," American Economic Review, American Economic Association, American Economic Association, vol. 91(2), pages 107-111, May.
  21. Angrist, Joshua D & Graddy, Kathryn & Imbens, Guido W, 2000. "The Interpretation of Instrumental Variables Estimators in Simultaneous Equations Models with an Application to the Demand for Fish," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 67(3), pages 499-527, July.
  22. Milligan, Kevin & Stabile, Mark, 2007. "The integration of child tax credits and welfare: Evidence from the Canadian National Child Benefit program," Journal of Public Economics, Elsevier, Elsevier, vol. 91(1-2), pages 305-326, February.
  23. Newey, Whitney K, 1990. "Semiparametric Efficiency Bounds," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 5(2), pages 99-135, April-Jun.
  24. Solon, Gary, 1999. "Intergenerational mobility in the labor market," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 29, pages 1761-1800 Elsevier.
  25. Lance Lochner & Enrico Moretti, 2011. "Estimating and Testing Models with Many Treatment Levels and Limited Instruments," NBER Working Papers 17039, National Bureau of Economic Research, Inc.
  26. Lance Lochner & Enrico Moretti, 2011. "Estimating and Testing Non-Linear Models Using Instrumental Variables," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers, University of Western Ontario, CIBC Centre for Human Capital and Productivity 20112, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  27. Dan Maurice Levy & Greg Duncan, 2000. "Using Sibling Samples to Assess the Effect of Childhood Family Income on Completed Schooling," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 168, Northwestern University/University of Chicago Joint Center for Poverty Research.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. What Linear Estimators Miss: The Effects of Family Income on Child Outcomes (AEJ:AE 2012) in ReplicationWiki

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:hhs:bergec:2011_002. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kjell Erik Lommerud).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.