EconPapers    
Economics at your fingertips  
 

Life-Cycle Consumption and Children: Evidence from a Structural Estimation

Thomas Jørgensen ()

No 15-08, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: I study how children affect the marginal utility of non-durable consumption.I estimate by Maximum Likelihood a structural economic model of optimal intertemporal allocation of consumption in the presence of children using high quality Danish administrative longitudinal data. Contrary to existing studies, I allow income uncertainty, credit constraints, and post-retirement motives to affect household behavior while the number and age of all children can affect the marginal utility of consumption. I estimate that children have a negligible effect on the marginal utility of non-durable consumption. To reconcile these results with existing studies, typically estimating an important role for children while ignoring precautionary motives, I illustrate how ignoring precautionary motives increases the estimated importance of children. I interpret the results as indicating that precautionary motives might play a larger role than children in explaining the observed consumption age profile.

Keywords: Consumption; Children; Precautionary saving; Life cycle; Structural Estimation (search for similar items in EconPapers)
JEL-codes: D12 D14 D91 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015-05-26
New Economics Papers: this item is included in nep-dge and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.econ.ku.dk/english/research/publications/wp/dp_2015/1508.pdf (application/pdf)

Related works:
Journal Article: Life-Cycle Consumption and Children: Evidence from a Structural Estimation (2017) Downloads
Working Paper: Life-Cycle Consumption and Children (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:1508

Access Statistics for this paper

More papers in Discussion Papers from University of Copenhagen. Department of Economics Oester Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().

 
Page updated 2022-01-15
Handle: RePEc:kud:kuiedp:1508