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Job Insecurity and Youth Emancipation: A Theoretical Approach

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  • Becker, Sascha O.
  • Bentolila, Samuel
  • Fernandes, Ana
  • Ichino, Andrea

Abstract

In this paper, we propose a theoretical model to study the effect of income insecurity of parents and offspring on the child's residential choice. Parents are partially altruistic toward their children and will provide financial help to an independent child when her income is low relative to the parents'. We show that first-order stochastic dominance (FOSD) shifts in the distribution of the child's future income (or her parents') will have ambiguous effects on the child’s residential choice. The analysis identifies altruism as the source of ambiguity in the results. If parents are selfish or the joint income distribution of parents and child places no mass on the region where transfers are provided, a FOSD shift in the distribution of the child’s (parents’) future income will reduce (raise) the child’s current income threshold for independence.

Suggested Citation

  • Becker, Sascha O. & Bentolila, Samuel & Fernandes, Ana & Ichino, Andrea, 2005. "Job Insecurity and Youth Emancipation: A Theoretical Approach," CEPR Discussion Papers 5339, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5339
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    References listed on IDEAS

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    1. Sascha Becker & Samuel Bentolila & Ana Fernandes & Andrea Ichino, 2010. "Youth emancipation and perceived job insecurity of parents and children," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(3), pages 1047-1071, June.
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    8. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Intergenerational Support and the Life-Cycle Incomes of Young Men and Their Parents: Human Capital Investments, Coresidence, and Intergenerational Financial Transfers," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 84-112, January.
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    Cited by:

    1. Sascha Becker & Samuel Bentolila & Ana Fernandes & Andrea Ichino, 2010. "Youth emancipation and perceived job insecurity of parents and children," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(3), pages 1047-1071, June.
    2. Deborah A. Cobb-Clark & David C. Ribar, 2009. "Financial Stress, Family Conflict, and Youths’ Successful Transition to Adult Roles," CEPR Discussion Papers 627, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    3. Cobb-Clark, Deborah A., 2008. "Leaving Home: What Economics Has to Say about the Living Arrangements of Young Australians," IZA Discussion Papers 3309, Institute of Labor Economics (IZA).
    4. Mendez, Ildefonso, 2008. "The Role of Partnership Status and Expectations on the Emancipation Behaviour of Spanish Graduates," MPRA Paper 8655, University Library of Munich, Germany.
    5. Mario García-Ferreira & Ernesto Villanueva, 2007. "Employment risk and household formation: evidence from differences in firing costs," Working Papers 0737, Banco de España.

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    More about this item

    Keywords

    emancipation; job security; option value;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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