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Parents’ Incomes and Children’s Outcomes: A Quasi-Experiment

  • Akee, Randall K. Q.


    (University of California, Los Angeles)

  • Copeland, William


    (Duke University)

  • Keeler, Gordon


    (Duke University)

  • Angold, Adrian


    (Duke University)

  • Costello, Jane E.


    (Duke University)

Identifying the effect of parental incomes on child outcomes is difficult due to the correlation of unobserved ability, education levels and income. Previous research has relied on the use of instrumental variables to identify the effect of a change in household income on the young adult outcomes of the household’s children. In this research, we examine the role that an exogenous increase in household incomes due to a government transfer unrelated to household characteristics plays in the long run outcomes for children in affected households. We find that children who are in households affected by the cash transfer program have higher levels of education in their young adulthood and a lower incidence of criminality for minor offenses. These effects differ by initial household poverty status as is expected. Second, we explore two possible mechanisms through which this exogenous increase in household income affects the long run outcomes of children – parental time (quantity) and parental quality. Parental quality and child interactions show a marked improvement while changes in parental time with child does not appear to matter.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3520.

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Length: 47 pages
Date of creation: May 2008
Date of revision:
Publication status: published in: American Economic Journal: Applied Economics, 2010, 2 (1), 86-115
Handle: RePEc:iza:izadps:dp3520
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  1. repec:oup:qjecon:v:120:y:2005:i:1:p:87-130 is not listed on IDEAS
  2. Erik Plug, 2004. "Estimating the Effect of Mother's Schooling on Children's Schooling Using a Sample of Adoptees," American Economic Review, American Economic Association, vol. 94(1), pages 358-368, March.
  3. Jere R. Behrman & Susan W. Parker & Petra E. Todd, 2005. "Long-Term Impacts of the Oportunidades Conditional Cash Transfer Program on Rural Youth in Mexico," Ibero America Institute for Econ. Research (IAI) Discussion Papers 122, Ibero-America Institute for Economic Research.
  4. John Shea, 1997. "Does Parents' Money Matter?," NBER Working Papers 6026, National Bureau of Economic Research, Inc.
  5. Erik Plug & Wim Vijverberg, 2003. "Schooling, Family Background, and Adoption: Is It Nature or Is It Nurture?," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 611-641, June.
  6. Chevalier, Arnaud & Harmon, Colm P. & O'Sullivan, Vincent & Walker, Ian, 2005. "The Impact of Parental Income and Education on the Schooling of Their Children," IZA Discussion Papers 1496, Institute for the Study of Labor (IZA).
  7. Paul J. Devereux & Sandra E. Black & Kjell G. Salvanes, 2003. "Why the apple doesn't fall far : understanding intergenerational transmission of human capital," Open Access publications 10197/750, School of Economics, University College Dublin.
  8. Jo Blanden & Paul Gregg, 2004. "Family Income and Educational Attainment: A Review of Approaches and Evidence for Britain," CEE Discussion Papers 0041, Centre for the Economics of Education, LSE.
  9. Eric Maurin, 1999. "The Impact of Parental Income on Early Schooling Transitions : A Re-examination Using Data over Three Generations," Working Papers 99-69, Centre de Recherche en Economie et Statistique.
  10. Løken, Katrine V., 2010. "Family income and children's education: Using the Norwegian oil boom as a natural experiment," Labour Economics, Elsevier, vol. 17(1), pages 118-129, January.
  11. Joyce J. Chen, 2006. "Migration and Imperfect Monitoring: Implications for Intra-Household Allocation," American Economic Review, American Economic Association, vol. 96(2), pages 227-231, May.
  12. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
  13. Sylvia R. Epps & Aletha C. Huston, 2007. "Effects of a Poverty Intervention Policy Demonstration on Parenting and Child Behavior: A Test of the Direction of Effects," Social Science Quarterly, Southwestern Social Science Association, vol. 88(2), pages 344-365.
  14. Jeffrey R. Kling & Jeffrey B. Liebman & Lawrence F. Katz, 2005. "Experimental Analysis of Neighborhood Effects," NBER Working Papers 11577, National Bureau of Economic Research, Inc.
  15. Rebecca Blank, 2003. "Selecting Among Anti-Poverty Policies: Can an Economist be Both Critical and Caring?," Review of Social Economy, Taylor & Francis Journals, vol. 61(4), pages 447-469.
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