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Income Shocks and Investments in Human Capital

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  • Rita Ginja

    (University College London)

Abstract

I find that (1) families only partially insure against income shocks, but expenditures in education of children respond less to shocks than household consumption, as parents try to shield them against shocks because investments may be complements across children's life-cycle; (2) income elasticity of investments in terms of time is larger in families with young children than in families where there are only school-age children, because at early ages there is a larger substitutability between different uses of time; and (3) better off families use savings to buffer against shocks whereas poor families resort on public transfers.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 1165.

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Date of creation: 2010
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Handle: RePEc:red:sed010:1165

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Cited by:
  1. Christian Helmers & Manasa Patnam, 2010. "Does the Rotten Child Spoil His Companion? Spatial Peer Effects Among Children in Rural India," CSAE Working Paper Series 2010-13, Centre for the Study of African Economies, University of Oxford.
  2. Gonzalez, Libertad, 2011. "The Effects of a Universal Child Benefit," IZA Discussion Papers 5994, Institute for the Study of Labor (IZA).
  3. Emma Tominey, 2010. "The Timing of Parental Income and Child Outcomes: The Role of Permanent and Transitory Shocks," CEE Discussion Papers 0120, Centre for the Economics of Education, LSE.
  4. Helmers, Christian & Patnam, Manasa, 2011. "The formation and evolution of childhood skill acquisition: Evidence from India," Journal of Development Economics, Elsevier, vol. 95(2), pages 252-266, July.

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