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Income Shocks and Investments in Human Capital

  • Rita Ginja

    (University College London)

I find that (1) families only partially insure against income shocks, but expenditures in education of children respond less to shocks than household consumption, as parents try to shield them against shocks because investments may be complements across children's life-cycle; (2) income elasticity of investments in terms of time is larger in families with young children than in families where there are only school-age children, because at early ages there is a larger substitutability between different uses of time; and (3) better off families use savings to buffer against shocks whereas poor families resort on public transfers.

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Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 1165.

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Date of creation: 2010
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Handle: RePEc:red:sed010:1165
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

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