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Games Daughters and Parents Play: Teenage Childbearing, Parental Reputation, and Strategic Transfers

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  • Lingxin Hao
  • V. Joseph Hotz
  • Ginger Zhe Jin

Abstract

In this paper, we examine the empirical implications of reputation formation using a game-theoretic model of intra-familial interactions. We consider parental reputation in repeated two-stage games in which daughters' decision to have a child as a teenager and the willingness of parents to continue to house and support their daughters given their decisions. Drawing on the work of Milgrom and Roberts (1982) and Kreps and Wilson (1982) on reputation in repeated games, we show that parents have, under certain conditions, the incentive to penalize teenage (and typically out-of-wedlock) childbearing of older daughters, in order to get the younger daughters to avoid teenage childbearing. The two key empirical implications of this model is that the likelihood of teenage childbearing and parental transfers to a daughter who had a teen birth will decrease with the number of the daughter's sisters at risk. We test these two implications, using data from the National Longitudinal Survey of Youth, 1979 Cohort (NLSY79), exploiting the availability of repeated observations on young women (daughters) and of observations on multiple daughters (sisters) available in this data. Controlling for daughter- and family-specific fixed effects, we find evidence of differential parental financial transfer responses to teenage childbearing by the number of the daughter's sisters and brothers at risk.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7670.

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Date of creation: Apr 2000
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Handle: RePEc:nbr:nberwo:7670

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  1. Josefine Card, 1981. "Long-term consequences for children of teenage parents," Demography, Springer, Springer, vol. 18(2), pages 137-156, May.
  2. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, Econometric Society, vol. 66(6), pages 1241-1278, November.
  3. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(5), pages 1138-59, October.
  4. Lindbeck, Assar & Weibull, Jorgen W, 1988. "Altruism and Time Consistency: The Economics of Fait Accompli," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 96(6), pages 1165-82, December.
  5. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, Elsevier, vol. 27(2), pages 253-279, August.
  6. Hirshleifer, Jack, 1985. "The Expanding Domain of Economics," American Economic Review, American Economic Association, American Economic Association, vol. 75(6), pages 53-68, December.
  7. Michael J. Brien & Robert J. Willis, 1995. "The costs and Consequences of Early Fatherhood: The Impact on Young Men, Young Women and Their Children," Working Papers, Harris School of Public Policy Studies, University of Chicago 9502, Harris School of Public Policy Studies, University of Chicago.
  8. Thomas J. Nechyba, 2001. "Social Approval, Values, and AFDC: A Reexamination of the Illegitimacy Debate," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(3), pages 637-666, June.
  9. Maureen A. Pirog-Good & David H. Good, 1995. "Child support enforcement for teenage fathers: Problems and prospects," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 14(1), pages 25-42.
  10. Bruce, Neil & Waldman, Michael, 1990. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(1), pages 155-65, February.
  11. Paul Milgrom & John Roberts, 1980. "Predation, Reputation, and Entry Deterrence," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 427, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  12. V. Joseph Hotz & Susan Williams McElroy & Seth G. Sanders, 2005. "Teenage Childbearing and Its Life Cycle Consequences: Exploiting a Natural Experiment," Journal of Human Resources, University of Wisconsin Press, vol. 40(3).
  13. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, Econometric Society, vol. 46(5), pages 985-1012, September.
  14. Abowd, John M & Card, David, 1989. "On the Covariance Structure of Earnings and Hours Changes," Econometrica, Econometric Society, Econometric Society, vol. 57(2), pages 411-45, March.
  15. Kane, Thomas J & Staiger, Douglas, 1996. "Teen Motherhood and Abortion Access," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(2), pages 467-506, May.
  16. Rosenzweig, Mark R & Wolpin, Kenneth I, 1994. "Parental and Public Transfers to Young Women and Their Children," American Economic Review, American Economic Association, American Economic Association, vol. 84(5), pages 1195-1212, December.
  17. Akerlof, George A & Yellen, Janet L & Katz, Michael L, 1996. "An Analysis of Out-of-Wedlock Childbearing in the United States," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(2), pages 277-317, May.
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Cited by:
  1. Jellal, Mohamed & Wolff, François Charles, 2003. "Leaving home as a self-selection device," MPRA Paper 38528, University Library of Munich, Germany.
  2. Charlene M Kalenkoski, 2002. "Parent-Child Bargaining, Parental Transfers, and the Postsecondary Education Decision," Working Papers, Center for Economic Studies, U.S. Census Bureau 02-13, Center for Economic Studies, U.S. Census Bureau.

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