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Partial Insurance and Investments in Children

Author

Listed:
  • Pedro Carneiro
  • Rita Ginja

Abstract

This article studies the impact of permanent and transitory shocks to income on parental investments in children. We use panel data on family income and an index of investments in children, from the Children of the National Longitudinal Survey of Youth. We find that there is partial insurance of parental investments against permanent income shocks but the magnitude of the estimated responses is small. We cannot reject the hypothesis of full insurance against temporary shocks. Another interpretation of our findings is that insurance possibilities are limited but the fact that skill is a non†separable function of parental investments over time results in small reactions of these investments to income shocks, especially at later ages.

Suggested Citation

  • Pedro Carneiro & Rita Ginja, 2016. "Partial Insurance and Investments in Children," Economic Journal, Royal Economic Society, vol. 126(596), pages 66-95, October.
  • Handle: RePEc:wly:econjl:v:126:y:2016:i:596:p:f66-f95
    DOI: 10.1111/ecoj.12421
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    File URL: https://doi.org/10.1111/ecoj.12421
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    1. Partial insurance and investments in children By: Pedro Carneiro (Institute for Fiscal Studies and cemmap and UCL) ; Rita Ginja (Institute for Fiscal Studies and University of Uppsala)
      by maximorossi in NEP-LTV blog on 2015-08-17 19:33:01

    Citations

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    Cited by:

    1. Rita Ginja & Jenny Jans & Arizo Karimi, 2017. "Parental Investments in Early Life and Child Outcomes: Evidence from Swedish Parental Leave Rules," Working Papers 2017-085, Human Capital and Economic Opportunity Working Group.
    2. Agar Brugiavini & Raluca Elena Buia & Matija Kovacic & Cristina Elisa Orso, 2020. "Adverse childhood experiences and risk behaviours later in life: Evidence from SHARE countries," Working Papers 2020:08, Department of Economics, University of Venice "Ca' Foscari".
    3. von Hinke, Stephanie & Leckie, George, 2017. "Protecting energy intakes against income shocks," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 210-232.
    4. Jake Anders & Francis Green & Morag Henderson & Golo Henseke, 2020. "Determinants of private school participation: all about the money?," CEPEO Working Paper Series 20-06, Centre for Education Policy and Equalising Opportunities, UCL Institute of Education, revised Feb 2020.
    5. Emilia Del Bono & Marco Francesconi & Yvonne Kelly & Amanda Sacker, 2016. "Early Maternal Time Investment and Early Child Outcomes," Economic Journal, Royal Economic Society, vol. 126(596), pages 96-135, October.
    6. Elizabeth M. Caucutt & Lance Lochner, 2020. "Early and Late Human Capital Investments, Borrowing Constraints, and the Family," Journal of Political Economy, University of Chicago Press, vol. 128(3), pages 1065-1147.
    7. Huebener, Mathias & Kuehnle, Daniel & Spiess, C. Katharina, 2019. "Parental leave policies and socio-economic gaps in child development: Evidence from a substantial benefit reform using administrative data," Labour Economics, Elsevier, vol. 61(C).
    8. Tominey, Emma, 2013. "Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock," IZA Discussion Papers 7462, Institute of Labor Economics (IZA).
    9. Iga Magda & Roma Keister, 2018. "Working time flexibility and parental ‘quality time’ spent with children," IBS Working Papers 04/2018, Instytut Badan Strukturalnych.
    10. Kuger, Susanne & Marcus, Jan & Spiess, C. Katharina, 2019. "Day care quality and changes in the home learning environment of children," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 265-286.
    11. Rita Ginja & Jenny Jans & Arizo Karimi, 2020. "Parental Leave Benefits, Household Labor Supply, and Children’s Long-Run Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 38(1), pages 261-320.
    12. Camehl, Georg F. & Schober, Pia S. & Spiess, C. Katharina, 2018. "Information asymmetries between parents and educators in German childcare institutions," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 1-23.
    13. Stephanie von Hinke & George Leckie, 2017. "Protecting Calorie Intakes against Income Shocks," Bristol Economics Discussion Papers 17/684, Department of Economics, University of Bristol, UK.
    14. Marie C. Hull, 2017. "The time-varying role of the family in student time use and achievement," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-20, December.
    15. Tominey, Emma, 2016. "Female labour supply and household employment shocks: Maternity leave as an insurance mechanism," European Economic Review, Elsevier, vol. 87(C), pages 256-271.
    16. C. Aina & D. Sonedda, 2018. "Investment in education and household consumption," Working Paper CRENoS 201806, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    17. Collischon, Matthias & Kühnle, Daniel & Oberfichtner, Michael, 2020. "Cash-For-Care, or Caring for Cash? The Effects of a Home Care Subsidy on Maternal Employment, Childcare Choices, and Children's Development," IZA Discussion Papers 13271, Institute of Labor Economics (IZA).
    18. Susanne Kuger & Jan Marcus & C. Katharina Spiess, 2017. "Does Quality of Early Childhood Education and Care Affect the Home Learning Environment of Children?," Discussion Papers of DIW Berlin 1687, DIW Berlin, German Institute for Economic Research.
    19. Mathias Huebener & Daniel Kuehnle & C. Katharina Spiess, 2017. "Paid Parental Leave and Child Development: Evidence from the 2007 German Parental Benefit Reform and Administrative Data," Discussion Papers of DIW Berlin 1651, DIW Berlin, German Institute for Economic Research.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J1 - Labor and Demographic Economics - - Demographic Economics

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