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Partial Insurance and Investments in Children


  • Carneiro, Pedro

    (University College London)

  • Ginja, Rita

    () (Department of Economics)


This paper 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 in time and goods, from the Children of the National Longitudinal Survey of Youth. Consistent with the literature focusing on non-durable expenditure, we find that there is only partial insurance of parental investments against permanent income shocks, and we cannot reject the hypothesis full insurance against temporary shocks. Nevertheless, the magnitude of the estimated responses is small. A permanent shock corresponding to 10% of family income leads, at most, to an increase in investments of 1.3% of a standard deviation.

Suggested Citation

  • Carneiro, Pedro & Ginja, Rita, 2012. "Partial Insurance and Investments in Children," Working Paper Series 2012:20, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uunewp:2012_020

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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. Emma Tominey, 2013. "Maternity Leave and the Responsiveness of Female Labor Supply to a Household Shock," Discussion Papers 13/11, Department of Economics, University of York.
    4. Del Bono, Emilia & Francesconi, Marco & Kelly, Yvonne & Sacker, Amanda, 2014. "Early Maternal Time Investment and Early Child Outcomes," IZA Discussion Papers 8608, Institute for the Study of Labor (IZA).
    5. 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.
    6. repec:spr:izalbr:v:6:y:2017:i:1:d:10.1186_s40172-017-0060-5 is not listed on IDEAS
    7. 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.
    8. 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.
    9. 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


    Insurance; human capital; consumption;

    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


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