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Partial Insurance and Investments in Children

Pedro Carneiro () and Rita Ginja ()

No 8979, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper studies the impact of permanent and transitory shocks to income on parental investments in children. We use panel data on family income, and an index of investments in children in time and goods, from the Children of the National Longitudinal Survey of Youth. Consistent with the literature focusing on non-durable expenditure, we find that there is only partial insurance of parental investments against permanent income shocks, but the magnitude of the estimated responses is small. We cannot reject the hypothesis full insurance against temporary shocks. Another interpretation of our findings is that there is very little insurance available, but the fact that skill is a non-separable function of parental investments over time results in small reactions of these investments to income shocks, especially at later ages.

Keywords: consumption; human capital; insurance (search for similar items in EconPapers)
JEL-codes: D12 D91 I30 J1 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2015-04
New Economics Papers: this item is included in nep-dem, nep-ias, nep-lab and nep-ltv
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Published in: Economic Journal, 2016, 126, F66 -F95

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http://ftp.iza.org/dp8979.pdf (application/pdf)

Related works:
Journal Article: Partial Insurance and Investments in Children (2016) Downloads
Working Paper: Partial Insurance and Investments in Children (2015) Downloads
Working Paper: Partial insurance and investments in children (2015) Downloads
Working Paper: Partial Insurance and Investments in Children (2012) Downloads
Working Paper: Partial Insurance and Investments in Children (2012) Downloads
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