Joint Decisions on Household Membership and Human Capital Accumulation of Youths - The role of expected earnings and local markets
This paper analyses the effects of expected earnings and local markets conditions on the behaviour of young adults with high school diplomas. Decisions to either remain in the parental home or form a new household are modelled jointly with those of either gaining work experience or investing in a university education. A multinomial probit model estimates the probabilities of the different pairs of outcomes. Expected lifetime earnings of youths are modelled and estimated, and serve as choice-specific regressors in the probit model. According to our results, the most important factor influencing the choice of studying and residing with parents is expected lifetime earnings from a university degree. A sizeable discouraged worker effect induces young people to study when labour market opportunities are poor. The cost of housing greatly influences the choice of working and living in the parental home. Two policy experiments offer some suggestions for policy makers. The first one measures the extent to which housing policies, targeted at reducing housing costs, would allow youths to live away from the parental home. A second indicates how much labour market policies, targeted at lowering youth unemployment to some desired levels, could decrease the number of discouraged workers that choose to study.
|Date of creation:||Aug 2000|
|Date of revision:|
|Publication status:||published in: Journal of Population Economics, 2003, 16 (2), 265-285|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maite Martínez-Granado & Javier Ruiz-Castillo, 2002.
"The decisions of Spanish youth: A cross-section study,"
Journal of Population Economics,
Springer, vol. 15(2), pages 305-330.
- Maite Martínez & J. Ruiz Castillo, . "The decisions of Spanish youth: A cross-section study," Studies on the Spanish Economy 14, FEDEA.
- Guiso, Luigi & Jappelli, Tullio, 2002.
"Private Transfers, Borrowing Constraints and the Timing of Homeownership,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 34(2), pages 315-39, May.
- Guiso, Luigi & Jappelli, Tullio, 1998. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," CEPR Discussion Papers 2050, C.E.P.R. Discussion Papers.
- Luigi Guiso & Tullio Jappelli, 1999. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," CSEF Working Papers 17, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- David M. Blau, 1999. "The Effect Of Income On Child Development," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 261-276, May.
- Ermisch, John F, 1996. "Parental Support for Human Capital Investment by Young Adults," CEPR Discussion Papers 1536, C.E.P.R. Discussion Papers.
- Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
- Keane, Michael P, 1992. "A Note on Identification in the Multinomial Probit Model," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(2), pages 193-200, April.
- 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.
- McElroy, Marjorie B, 1985. "The Joint Determination of Household Membership and Market Work: The Case of Young Men," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 293-316, July.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Patricia Rice, 1999. "The impact of local labour markets on investment in further education: Evidence from the England and Wales youth cohort studies," Journal of Population Economics, Springer, vol. 12(2), pages 287-312.
- Stern, Steven, 1989. "Rules of thumb for comparing multinomial logit and multinomial probit coefficients," Economics Letters, Elsevier, vol. 31(3), pages 235-238, December.
- Brunello, Giorgio & Lupi, Claudio & Ordine, Patrizia, 2001. "Widening differences in Italian regional unemployment," Labour Economics, Elsevier, vol. 8(1), pages 103-129, January.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp191. 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: (Mark Fallak)
If references are entirely missing, you can add them using this form.