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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. 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.
  2. 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.
  3. Løken, Katrine V., 2010. "Family income and children's education: Using the Norwegian oil boom as a natural experiment," Labour Economics, Elsevier, vol. 17(1), pages 118-129, January.
  4. Paul J. Devereux & Sandra E. Black & Kjell G. Salvanes, 2003. "Why the apple doesn't fall far : understanding intergenerational transmission of human capital," Open Access publications 10197/750, School of Economics, University College Dublin.
  5. Eric Maurin, 1999. "The Impact of Parental Income on Early Schooling Transitions : A Re-examination Using Data over Three Generations," Working Papers 99-69, Centre de Recherche en Economie et Statistique.
  6. Esther Duflo, 2000. "Grandmothers and Granddaughters: Old Age Pension and Intra-household Allocation in South Africa," NBER Working Papers 8061, 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. repec:oup:qjecon:v:120:y:2005:i:1:p:87-130 is not listed on IDEAS
  9. 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.
  10. A Chevalier & C Harmon & V O'Sullivan & I Walker, 2010. "The Impact of Parental Income and Education on the Schooling of their Children," Working Papers 610852, Lancaster University Management School, Economics Department.
  11. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
  12. repec:oup:qjecon:v:119:y:2004:i:1:p:249-275 is not listed on IDEAS
  13. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  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 333, London School of Economics and Political Science, LSE Library.
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