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Parents’ Incomes and Children’s Outcomes: A Quasi-Experiment

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Author Info
Akee, Randall K. Q. () (IZA)
Copeland, William () (Duke University)
Keeler, Gordon () (Duke University)
Angold, Adrian () (Duke University)
Costello, Jane E. () (Duke University)

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Abstract

Identifying the effect of parental incomes on child outcomes is difficult due to the correlation of unobserved ability, education levels and income. Previous research has relied on the use of instrumental variables to identify the effect of a change in household income on the young adult outcomes of the household’s children. In this research, we examine the role that an exogenous increase in household incomes due to a government transfer unrelated to household characteristics plays in the long run outcomes for children in affected households. We find that children who are in households affected by the cash transfer program have higher levels of education in their young adulthood and a lower incidence of criminality for minor offenses. These effects differ by initial household poverty status as is expected. Second, we explore two possible mechanisms through which this exogenous increase in household income affects the long run outcomes of children – parental time (quantity) and parental quality. Parental quality and child interactions show a marked improvement while changes in parental time with child does not appear to matter.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3520.

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Date of creation: May 2008
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Handle: RePEc:iza:izadps:dp3520

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Related research
Keywords: quasi-experiment; criminality; cash transfer programs; difference-in-differences; educational attainment; panel data;

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Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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  1. Chevalier, Arnaud & Harmon, Colm & O’Sullivan, Vincent & Walker, Ian, 2005. "The Impact of Parental Income and Education on the Schooling of Their Children," IZA Discussion Papers 1496, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. Jeffrey R Kling & Jeffrey B Liebman & Lawrence F Katz, 2007. "Experimental Analysis of Neighborhood Effects," Econometrica, Econometric Society, vol. 75(1), pages 83-119, 01. [Downloadable!] (restricted)
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  3. Maurin, Eric, 2002. "The impact of parental income on early schooling transitions: A re-examination using data over three generations," Journal of Public Economics, Elsevier, vol. 85(3), pages 301-332, September. [Downloadable!] (restricted)
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  4. Sylvia R. Epps & Aletha C. Huston, 2007. "Effects of a Poverty Intervention Policy Demonstration on Parenting and Child Behavior: A Test of the Direction of Effects," Social Science Quarterly, The Southwestern Social Science Association, vol. 88(2), pages 344-365. [Downloadable!] (restricted)
  5. Black, Sandra E. & Devereux, Paul J. & Salvanes, Kjell G., 2003. "Why the Apple Doesn’t Fall Far: Understanding Intergenerational Transmission of Human Capital," IZA Discussion Papers 926, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Shea, John, 2000. "Does parents' money matter?," Journal of Public Economics, Elsevier, vol. 77(2), pages 155-184, August. [Downloadable!] (restricted)
  7. Jo Blanden & Paul Gregg, 2004. "Family Income and Educational Attainment: A Review of Approaches and Evidence for Britain," CEE Discussion Papers 0041, Centre for the Economics of Education, LSE. [Downloadable!]
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  8. Erik Plug, 2004. "Estimating the Effect of Mother's Schooling on Children's Schooling Using a Sample of Adoptees," American Economic Review, American Economic Association, vol. 94(1), pages 358-368, March. [Downloadable!]
  9. Jeffrey R. Kling & Jens Ludwig & Lawrence F. Katz, 2004. "Neighborhood Effects on Crime for Female and Male Youth: Evidence from a Randomized Housing Voucher Experiment," NBER Working Papers 10777, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Jere R. Behrman & Susan W. Parker & Petra E. Todd, 2005. "Long-Term Impacts of the Oportunidades Conditional Cash Transfer Program on Rural Youth in Mexico," Ibero America Institute for Econ. Research (IAI) Discussion Papers 122, Ibero-America Institute for Economic Research. [Downloadable!]
  11. Erik Plug & Wim Vijverberg, 2000. "Schooling, Family Background, and Adoption: Is It Nature of Is It Nurture?," Discussion Papers 736, The Research Institute of the Finnish Economy. [Downloadable!]
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  12. Rebecca Blank, 2003. "Selecting Among Anti-Poverty Policies: Can an Economist be Both Critical and Caring?," Review of Social Economy, Taylor and Francis Journals, vol. 61(4), pages 447-469, December. [Downloadable!] (restricted)
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