IDEAS home Printed from https://ideas.repec.org/a/spr/demogr/v55y2018i5d10.1007_s13524-018-0703-6.html
   My bibliography  Save this article

Parental Investments in College and Later Cash Transfers

Author

Listed:
  • Steven J. Haider

    () (Michigan State University)

  • Kathleen McGarry

    (University of California, Los Angeles)

Abstract

Parents often provide generous financial transfers to their adult children, perhaps assisting with college expenses, recognizing major life course events, or cushioning against negative financial shocks. Because resources are limited, a transfer made to one child likely affects transfers made to others in the family. Despite such possibilities, data limitations have led previous authors to focus almost exclusively on a single type of transfer made at a single point in time. Using data from the Health and Retirement Study, we examine the relationships among parental transfers for college and later cash transfers to all children within a family. We find that parents typically spend differentially on the postsecondary schooling of their children but find no evidence that this differential spending is offset by later cash transfers.

Suggested Citation

  • Steven J. Haider & Kathleen McGarry, 2018. "Parental Investments in College and Later Cash Transfers," Demography, Springer;Population Association of America (PAA), vol. 55(5), pages 1705-1725, October.
  • Handle: RePEc:spr:demogr:v:55:y:2018:i:5:d:10.1007_s13524-018-0703-6
    DOI: 10.1007/s13524-018-0703-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13524-018-0703-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alison Booth & Hiau Kee, 2009. "Birth order matters: the effect of family size and birth order on educational attainment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(2), pages 367-397, April.
    2. Stephen V. Cameron & Christopher Taber, 2004. "Estimation of Educational Borrowing Constraints Using Returns to Schooling," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 132-182, February.
    3. Becker, Gary S & Tomes, Nigel, 1976. "Child Endowments and the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 143-162, August.
    4. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2005. "The More the Merrier? The Effect of Family Size and Birth Order on Children's Education," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 669-700.
    5. Audrey Light & Kathleen McGarry, 2004. "Why Parents Play Favorites: Explanations for Unequal Bequests," American Economic Review, American Economic Association, vol. 94(5), pages 1669-1681, December.
    6. Lance Lochner & Alexander Monge-Naranjo, 2012. "Credit Constraints in Education," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 225-256, July.
    7. B. Douglas Bernheim & Sergei Severinov, 2003. "Bequests as Signals: An Explanation for the Equal Division Puzzle," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 733-764, August.
    8. Steven J. Haider & Melvin Stephens, 2007. "Is There a Retirement-Consumption Puzzle? Evidence Using Subjective Retirement Expectations," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 247-264, May.
    9. Michael D. Hurd & James P. Smith & Julie Zissimopoulos, 2007. "Inter-vivos Giving Over the Lifecycle," Working Papers WR-524, RAND Corporation.
    10. Jasmin Kantarevic & St├ęphane Mechoulan, 2006. "Birth Order, Educational Attainment, and Earnings: An Investigation Using the PSID," Journal of Human Resources, University of Wisconsin Press, vol. 41(4).
    11. Martha J. Bailey & Susan M. Dynarski, 2011. "Gains and Gaps: Changing Inequality in U.S. College Entry and Completion," NBER Working Papers 17633, National Bureau of Economic Research, Inc.
    12. Christopher Dougherty, 2005. "Why Are the Returns to Schooling Higher for Women than for Men?," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 969-988.
    13. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1982. "Parental Preferences and Provision for Progeny," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 52-73, February.
    14. Brian A. Jacob, 2002. "Where the boys aren't: Non-cognitive skills, returns to school and the gender gap in higher education," NBER Working Papers 8964, National Bureau of Economic Research, Inc.
    15. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 37-89.
    16. William G. Gale & John Karl Scholz, 1994. "Intergenerational Transfers and the Accumulation of Wealth," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 145-160, Fall.
    17. Kathleen McGarry & Robert F. Schoeni, 1995. "Transfer Behavior in the Health and Retirement Study: Measurement and the Redistribution of Resources within the Family," Journal of Human Resources, University of Wisconsin Press, vol. 30, pages 184-226.
    18. Steven J. Haider & Kathleen McGarry, 2018. "Parental Investments in College and Later Cash Transfers," Demography, Springer;Population Association of America (PAA), vol. 55(5), pages 1705-1725, October.
    19. Jacob, Brian A., 2002. "Where the boys aren't: non-cognitive skills, returns to school and the gender gap in higher education," Economics of Education Review, Elsevier, vol. 21(6), pages 589-598, December.
    20. William L. Parish & Robert J. Willis, 1993. "Daughters, Education, and Family Budgets Taiwan Experiences," Journal of Human Resources, University of Wisconsin Press, vol. 28(4), pages 863-898.
    21. Michael D. Hurd & Kathleen McGarry, 1995. "Evaluation of the Subjective Probabilities of Survival in the Health and Retirement Study," Journal of Human Resources, University of Wisconsin Press, vol. 30, pages 268-292.
    22. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986. "The Strategic Bequest Motive," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 151-182, July.
    23. McGarry, Kathleen, 2016. "Dynamic aspects of family transfers," Journal of Public Economics, Elsevier, vol. 137(C), pages 1-13.
    24. McGarry, Kathleen, 1999. "Inter vivos transfers and intended bequests," Journal of Public Economics, Elsevier, vol. 73(3), pages 321-351, September.
    25. Wilhelm, Mark O, 1996. "Bequest Behavior and the Effect of Heirs' Earnings: Testing the Altruistic Model of Bequests," American Economic Review, American Economic Association, vol. 86(4), pages 874-892, September.
    26. Meta Brown & John Karl Scholz & Ananth Seshadri, 2012. "A New Test of Borrowing Constraints for Education," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 511-538.
    27. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1989. "Family Resources, Family Size, and Access to Financing for College Education," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 398-419, April.
    28. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1986. "Do Parents Favor Boys?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 33-54, February.
    29. Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1997. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1121-1166, December.
    30. Lisa Barrow & Cecilia Elena Rouse, 2005. "Do Returns to Schooling Differ by Race and Ethnicity?," American Economic Review, American Economic Association, vol. 95(2), pages 83-87, May.
    31. Kristin F. Butcher & Anne Case, 1994. "The Effect of Sibling Sex Composition on Women's Education and Earnings," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 531-563.
    32. Frank Furstenberg & Saul Hoffman & Laura Shrestha, 1995. "The effect of divorce on intergenerational transfers: New evidence," Demography, Springer;Population Association of America (PAA), vol. 32(3), pages 319-333, August.
    33. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-546, June.
    34. Behrman, Jere R & Taubman, Paul, 1986. "Birth Order, Schooling, and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 121-145, July.
    35. Peter H. Lindert, 1977. "Sibling Position and Achievement," Journal of Human Resources, University of Wisconsin Press, vol. 12(2), pages 198-219.
    36. 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 1138-1159, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:hka:wpaper:2013-20 is not listed on IDEAS
    2. Steven J. Haider & Kathleen McGarry, 2018. "Parental Investments in College and Later Cash Transfers," Demography, Springer;Population Association of America (PAA), vol. 55(5), pages 1705-1725, October.
    3. McGarry, Kathleen, 2016. "Dynamic aspects of family transfers," Journal of Public Economics, Elsevier, vol. 137(C), pages 1-13.
    4. Lance Lochner & Todd Stinebrickner & Utku Suleymanoglu, 2013. "The Importance of Financial Resources for Student Loan Repayment," Working Papers 2013-020, Human Capital and Economic Opportunity Working Group.
    5. Moshe HAZAN & Hosny ZOABI, 2015. "Sons or Daughters? Sex Preferences and the Reversal of the Gender Educational Gap," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 81(2), pages 179-201, June.
    6. Sunha Myong & Jungho Lee, 2019. "Self-financing, Parental Transfer, and College Education," 2019 Meeting Papers 106, Society for Economic Dynamics.
    7. Naijia Guo & Charles Ka Yui Leung, 2020. "Do Elite Colleges Matter? The Impact of Elite College Attendance on Entrepreneurship Decisions and Career Dynamics," GRU Working Paper Series GRU_2020_005, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    8. Chih-Chin Ho & Ching-Yang Lin & Cheng-Tao Tang, 2013. "How Do Income and Bequest Taxes Affect Income Inequality? The Role of Parental Transfers," Working Papers EMS_2013_10, Research Institute, International University of Japan.
    9. Julie Zissimopoulos & Johanna Thunell & Stipica Mudrazija, 2020. "Parental Income and Wealth Loss and Transfers to Their Young Adult Children," Journal of Family and Economic Issues, Springer, vol. 41(2), pages 316-331, June.

    More about this item

    Keywords

    Economic demography; Human capital investment; Economics of the family; Inter vivos transfers;

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H4 - Public Economics - - Publicly Provided Goods
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:demogr:v:55:y:2018:i:5:d:10.1007_s13524-018-0703-6. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.