Insurance against Income Shocks, Parental Investments, and Child Development

Pedro Carneiro, Kjell Gunnar Salvanes () and Emma Tominey ()
Additional contact information
Kjell Gunnar Salvanes: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway, https://sites.google.com/view/kjellsalvanes/home
Emma Tominey: Dept. of Economics and Related Studies, University of York, Postal: University of York, Department of Economics and Related Studies, Alcuin College Block D, Alcuin Way, Heslington, York YO10 5DD, United Kingdom, https://sites.google.com/a/york.ac.uk/emma-tominey

No 10/2024, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: Faced with income shocks, households may be unable to smooth their consumption, because of limited insurance possibilities. Likewise, it may also be difficult to smooth investments in children. This could have large consequences for their human capital if there are sensitive periods of learning, or if investments are not perfect substitutes over time. In this paper we estimate the impact of transitory and permanent shocks to household income in different periods of childhood on the human capital of their children, using administrative records from Norway. Across outcomes, the impacts of transitory and permanent shocks are largely similar regardless of the age at which they occur, with a few exceptions (small in magnitude). The impact of transitory shocks is larger for college enrolment and obesity if these shocks occur at earlier ages. The impacts of permanent shocks on high school graduation are larger the later in childhood they occur.

Keywords: Child human capital; insurance; income dynamics (search for similar items in EconPapers)
JEL-codes: D12 J13 (search for similar items in EconPapers)
Pages: 76 pages
Date: 2024-06-10
New Economics Papers: this item is included in nep-dem and nep-lab
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Working Paper: Insurance against Income Shocks, Parental Investments, and Child Development (2024)
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