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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
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    File URL: https://doi.org/10.1111/ecoj.12421
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    Cited by:

    1. repec:eee:jeborg:v:141:y:2017:i:c:p:210-232 is not listed on IDEAS
    2. Elizabeth M. Caucutt & Lance Lochner, 2012. "Early and Late Human Capital Investments, Borrowing Constraints, and the Family," NBER Working Papers 18493, National Bureau of Economic Research, Inc.
    3. Huebener, Mathias & Kühnle, Daniel & Spieß, C. Katharina, 2018. "Parental Leave Policies and Socio-Economic Gaps in Child Development: Evidence from a Substantial Benefit Reform Using Administrative Data," IZA Discussion Papers 11794, Institute for the Study of Labor (IZA).
    4. Tominey, Emma, 2013. "Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock," IZA Discussion Papers 7462, Institute for the Study of Labor (IZA).
    5. Iga Magda & Roma Keister, 2018. "Working time flexibility and parental ‘quality time’ spent with children," IBS Working Papers 04/2018, Instytut Badan Strukturalnych.
    6. 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.
    7. Ginja, Rita & Jans, Jenny & Karimi, Arizo, 2017. "Parental Investments in Early Life and Child Outcomes. Evidence from Swedish Parental Leave Rules," Working Papers in Economics 17/17, University of Bergen, Department of Economics.
    8. repec:zbw:espost:180840 is not listed on IDEAS
    9. 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.
    10. repec:spr:izalbr:v:6:y:2017:i:1:d:10.1186_s40172-017-0060-5 is not listed on IDEAS
    11. 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.
    12. 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.
    13. 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.
    14. 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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