The (Lack of) Anticipatory Effects of the Social Safety Net on Human Capital Investment

ManasI Deshpande and Rebecca Dizon-Ross

No 31512, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: How does the expectation that a child will receive government benefits in adulthood affect parental investments in the child's human capital? Most parents whose children receive Supplemental Security Income (SSI) benefits overestimate the likelihood that their child will receive SSI benefits in adulthood. We present randomly-selected families with the predicted likelihood that their child will receive SSI benefits in adulthood. Reducing parents' expectations that children will receive benefits in adulthood does not increase investments in children's human capital. This zero effect is precisely estimated. Likely explanations include parents working more themselves, non-financial goals influencing investment, and families facing investment constraints.

JEL-codes: H20 I20 I3 (search for similar items in EconPapers)
Date: 2023-07
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Published as Manasi Deshpande & Rebecca Dizon-Ross, 2023. "The (Lack of) Anticipatory Effects of the Social Safety Net on Human Capital Investment," American Economic Review, vol 113(12), pages 3129-3172.

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