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The schooling repayment hypothesis for private transfers: evidence from the PROGRESA/Oportunidades experiment

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  • Carlos Chiapa

    () (El Colegio de México)

  • Laura Juarez

    () (Banco de México)

Abstract

The schooling repayment hypothesis for private transfers predicts a positive relationship between the amount of parental investment in children’s education and the amount that adult children transfer to their parents. We provide evidence on the repayment motive using data from the Mexican conditional cash transfer program PROGRESA/Oportunidades (PO). PO pays a transfer to parents for sending their children to school. Thus, if private transfers from adult children to parents are in part repayment for parental schooling investments made in the past, then PO should decrease these transfers—parents were already exogenously compensated by the government for sending their kids to school and not to work. Exploiting the exogenous variation in the amount of cash transfers a household receives from PO for sending its children to school, we compare the private transfers received in 2007 by parental households who had children 0–16 in 1997 and started receiving the programs’ benefits in 1998 with the transfers received by similar parental households who started receiving benefits in 1999. Results suggest a repayment motive exists. That is, PO is causing adult children to transfer less resources to their parents.

Suggested Citation

  • Carlos Chiapa & Laura Juarez, 2016. "The schooling repayment hypothesis for private transfers: evidence from the PROGRESA/Oportunidades experiment," Review of Economics of the Household, Springer, vol. 14(4), pages 811-828, December.
  • Handle: RePEc:kap:reveho:v:14:y:2016:i:4:d:10.1007_s11150-015-9303-z
    DOI: 10.1007/s11150-015-9303-z
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    More about this item

    Keywords

    Parental schooling investments; Schooling repayment hypothesis; Intergenerational transfers; PROGRESA/Oportunidades;
    All these keywords.

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J19 - Labor and Demographic Economics - - Demographic Economics - - - Other

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