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Parents' Incomes and Children's Outcomes: A Quasi-experiment Using Transfer Payments from Casino Profits

  • Randall K. Q. Akee
  • William E. Copeland
  • Gordon Keeler
  • Adrian Angold
  • E. Jane Costello

We examine the role an exogenous increase in household income, due to a government transfer unrelated to household characteristics, plays in children's long-run outcomes. Children in affected households have higher levels of education in their young adulthood and a lower incidence of criminality for minor offenses. Effects differ by initial household poverty status. An additional $4,000 per year for the poorest households increases educational attainment by one year at age 21, and reduces the chances of committing a minor crime by 22 percent for 16 and 17 year olds. Our evidence suggests improved parental quality is a likely mechanism for the change. (JEL D14, H23, I32, I38, J13)

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Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 2 (2010)
Issue (Month): 1 (January)
Pages: 86-115

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Handle: RePEc:aea:aejapp:v:2:y:2010:i:1:p:86-115
Note: DOI: 10.1257/app.2.1.86
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  1. 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.
  2. 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).
  3. Plug, Erik & Vijverberg, Wim, 2000. "Schooling, Family Background, and Adoption: Is It Nature of Is It Nurture?," Discussion Papers 736, The Research Institute of the Finnish Economy.
  4. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  5. Arnaud Chevalier & Colm Harmon & Vincent O'Sullivan & Ian Walker, 2010. "The Impact of Parental Income and Education on the Schooling of their Children," Working Papers 201032, Geary Institute, University College Dublin.
  6. 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.
  7. Jo Blanden, 2004. "Family Income and Educational Attainment: A Review of Approaches and Evidence for Britain," Oxford Review of Economic Policy, Oxford University Press, vol. 20(2), pages 245-263, Summer.
  8. Jeffrey M Wooldridge, 2002. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," CeMMAP working papers CWP18/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  9. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 1-25, June.
  10. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  11. Paul J. Devereux & Sandra E. Black & Kjell G. Salvanes, 2005. "Why the apple doesn't fall far : understanding intergenerational transmission of human capital," Open Access publications 10197/309, School of Economics, University College Dublin.
  12. Lance Lochner & Enrico Moretti, 2004. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," American Economic Review, American Economic Association, vol. 94(1), pages 155-189, March.
  13. Løken, Katrine Vellesen, 2007. "Family income and children's education: Using the Norwegian oil boom as a natural experiment," Working Papers in Economics 03/07, University of Bergen, Department of Economics.
  14. Jo Blanden & Paul Gregg, 2004. "Family income and educational attainment: a review of approaches and evidence for Britain," LSE Research Online Documents on Economics 19461, London School of Economics and Political Science, LSE Library.
  15. Joyce J. Chen, 2006. "Migration and Imperfect Monitoring: Implications for Intra-Household Allocation," American Economic Review, American Economic Association, vol. 96(2), pages 227-231, May.
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