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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 giver 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 observatioins on multiple daughters (sisters) available on 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 Northwestern University/University of Chicago Joint Center for Poverty Research in its series JCPR Working Papers with number 167.

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Date of creation: 24 Apr 2000
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Handle: RePEc:wop:jopovw:167

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References

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  1. Thomas J. Nechyba, 1999. "Social Approval, Values, and AFDC: A Re-Examination of the Illegitimacy Debate," NBER Working Papers 7240, National Bureau of Economic Research, Inc.
  2. V. Joseph Hotz & Susan Williams McElroy & Seth G. Sanders, 1999. "Teenage Childbearing and Its Life Cycle Consequences: Exploiting a Natural Experiment," JCPR Working Papers 157, Northwestern University/University of Chicago Joint Center for Poverty Research.
  3. Josefine Card, 1981. "Long-term consequences for children of teenage parents," Demography, Springer, vol. 18(2), pages 137-156, May.
  4. Bruce, Neil & Waldman, Michael, 1990. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 155-65, February.
  5. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August.
  6. David Kreps & Robert Wilson, 1999. "Reputation and Imperfect Information," Levine's Working Paper Archive 238, David K. Levine.
  7. Kane, Thomas J & Staiger, Douglas, 1996. "Teen Motherhood and Abortion Access," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 467-506, May.
  8. Hirshleifer, Jack, 1985. "The Expanding Domain of Economics," American Economic Review, American Economic Association, vol. 75(6), pages 53-68, December.
  9. Browning, M. & Chiappori, P.A., 1994. "Efficient Intra-Household allocations: A General Characterization and Empirical Tests," DELTA Working Papers 94-16, DELTA (Ecole normale supérieure).
  10. 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., vol. 14(1), pages 25-42.
  11. Abowd, John M & Card, David, 1989. "On the Covariance Structure of Earnings and Hours Changes," Econometrica, Econometric Society, vol. 57(2), pages 411-45, March.
  12. Rosenzweig, Mark R & Wolpin, Kenneth I, 1994. "Parental and Public Transfers to Young Women and Their Children," American Economic Review, American Economic Association, vol. 84(5), pages 1195-1212, December.
  13. 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, vol. 111(2), pages 277-317, May.
  14. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1138-59, October.
  15. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, vol. 46(5), pages 985-1012, September.
  16. Lindbeck, Assar & Weibull, Jorgen W, 1988. "Altruism and Time Consistency: The Economics of Fait Accompli," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1165-82, December.
  17. 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 9502, Harris School of Public Policy Studies, University of Chicago.
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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 02-13, Center for Economic Studies, U.S. Census Bureau.

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