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Parents' risk aversion and children's educational attainment

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  • Checchi, Daniele
  • Fiorio, Carlo V.
  • Leonardi, Marco

Abstract

In this paper we study the role of parental risk aversion on children's educational choices. In a country like Italy where parental support is the main source of funds supporting college enrollment, we show that parents' risk aversion (elicited by surveys on lottery tolerance) has a significant negative effect on children's college enrollment. This negative effect is robust when we model non-response and introduce measures of liquidity constraints. With the help of a formal model, we interpret this evidence as suggestive that risk averse parents react to the uncertainty of future labour prospects of their children, whose ability is not fully observable. We show that parental risk aversion may contribute to explain the persistence of differences in the odds of attaining a college degree between children of parents with equal educational attainments.

Suggested Citation

  • Checchi, Daniele & Fiorio, Carlo V. & Leonardi, Marco, 2014. "Parents' risk aversion and children's educational attainment," Labour Economics, Elsevier, vol. 30(C), pages 164-175.
  • Handle: RePEc:eee:labeco:v:30:y:2014:i:c:p:164-175
    DOI: 10.1016/j.labeco.2014.04.001
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    References listed on IDEAS

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    Cited by:

    1. Holford, Angus, 2017. "Access to and returns from unpaid graduate internships," ISER Working Paper Series 2017-07, Institute for Social and Economic Research.
    2. Huebener, Mathias, 2015. "The role of paternal risk attitudes in long-run education outcomes and intergenerational mobility," Economics of Education Review, Elsevier, vol. 47(C), pages 64-79.

    More about this item

    Keywords

    Educational attainment; Family background; Risk aversion;

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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