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

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Author Info

  • Akee, Randall K. Q.

    ()
    (University of California, Los Angeles)

  • Copeland, William

    ()
    (Duke University)

  • Keeler, Gordon

    ()
    (Duke University)

  • Angold, Adrian

    ()
    (Duke University)

  • Costello, Jane E.

    ()
    (Duke University)

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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Bibliographic Info

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

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Length: 47 pages
Date of creation: May 2008
Date of revision:
Publication status: published in: American Economic Journal: Applied Economics, 2010, 2 (1), 86-115
Handle: RePEc:iza:izadps:dp3520

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Related research

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

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References

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  1. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2005. "Why the Apple Doesn't Fall Far: Understanding Intergenerational Transmission of Human Capital," American Economic Review, American Economic Association, American Economic Association, vol. 95(1), pages 437-449, March.
  2. Plug, Erik & Vijverberg, Wim, 2000. "Schooling, Family Background, and Adoption: Is It Nature of Is It Nurture?," Discussion Papers, The Research Institute of the Finnish Economy 736, The Research Institute of the Finnish Economy.
  3. Jo Blanden & Paul Gregg, 2004. "Family income and educational attainment : a review of approaches and evidence for Britain," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 333, London School of Economics and Political Science, LSE Library.
  4. Løken, Katrine V., 2010. "Family income and children's education: Using the Norwegian oil boom as a natural experiment," Labour Economics, Elsevier, Elsevier, vol. 17(1), pages 118-129, January.
  5. Jeffrey R. Kling & Jeffrey B. Liebman & Lawrence F. Katz, 2005. "Experimental Analysis of Neighborhood Effects," NBER Working Papers 11577, National Bureau of Economic Research, Inc.
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  7. 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.
  8. 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.
  9. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, American Economic Association, vol. 92(1), pages 323-334, March.
  10. 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, American Economic Association, vol. 94(1), pages 358-368, March.
  11. John Shea, 1997. "Does Parents' Money Matter?," NBER Working Papers 6026, National Bureau of Economic Research, Inc.
  12. Jo Blanden, 2004. "Family Income and Educational Attainment: A Review of Approaches and Evidence for Britain," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 20(2), pages 245-263, Summer.
  13. Rebecca Blank, 2003. "Selecting Among Anti-Poverty Policies: Can an Economist be Both Critical and Caring?," Review of Social Economy, Taylor & Francis Journals, Taylor & Francis Journals, vol. 61(4), pages 447-469.
  14. 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, Elsevier, vol. 85(3), pages 301-332, September.
  15. 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, Southwestern Social Science Association, vol. 88(2), pages 344-365.
  16. Joyce J. Chen, 2006. "Migration and Imperfect Monitoring: Implications for Intra-Household Allocation," American Economic Review, American Economic Association, American Economic Association, vol. 96(2), pages 227-231, May.
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Citations

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Cited by:
  1. Emma Tominey, 2010. "The Timing of Parental Income and Child Outcomes: The Role of Permanent and Transitory Shocks," CEE Discussion Papers, Centre for the Economics of Education, LSE 0120, Centre for the Economics of Education, LSE.
  2. Lance Lochner & Alexander Monge-Naranjo, 2011. "Credit Constraints in Education," NBER Working Papers 17435, National Bureau of Economic Research, Inc.
  3. Alexander M. Gelber & Matthew C. Weinzierl, 2012. "Equalizing Outcomes and Equalizing Opportunities: Optimal Taxation when Children's Abilities Depend on Parents' Resources," NBER Working Papers 18332, National Bureau of Economic Research, Inc.
  4. Anna Aizer & Shari Eli & Joseph P. Ferrie & Adriana Lleras-Muney, 2014. "The Long Term Impact of Cash Transfers to Poor Families," NBER Working Papers 20103, National Bureau of Economic Research, Inc.
  5. Felfe, Christina & Deuchert. Eva, 2011. "The tempest: Using a natural disaster to evaluate the link between wealth and child development," Economics Working Paper Series 1146, University of St. Gallen, School of Economics and Political Science.

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