Partial Insurance and Investments in Children
AbstractThis paper studies the impact of permanent and transitory shocks to income on parental investments in children. We use panel data on family income, and an index of investments in children in time and goods, from the Children of the National Longitudinal Survey of Youth. Consistent with the literature focusing on non-durable expenditure, we find that there is only partial insurance of parental investments against permanent income shocks, and we cannot reject the hypothesis full insurance against temporary shocks. Nevertheless, the magnitude of the estimated responses is small. A permanent shock corresponding to 10% of family income leads, at most, to an increase in investments of 1.3% of a standard deviation.
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Bibliographic InfoPaper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 2012:20.
Length: 32 pages
Date of creation: 30 Dec 2012
Date of revision:
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Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
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Insurance; human capital; consumption;
Other versions of this item:
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
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- Emma Tominey, 2013.
"Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock,"
13/11, Department of Economics, University of York.
- Tominey, Emma, 2013. "Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock," IZA Discussion Papers 7462, Institute for the Study of Labor (IZA).
- Emma Tominey, 2013. "Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock," Working Papers 2013-016, Human Capital and Economic Opportunity Working Group.
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