Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/36867 
Year of Publication: 
2010
Series/Report no.: 
IZA Discussion Papers No. 4971
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper uses a rich Norwegian dataset to re-examine the causal relationship between family income and child outcomes. Motivated by theoretical predictions and OLS results that suggest a nonlinear relationship, we depart from previous studies in allowing the marginal effects on children's outcomes of an increase in family income to vary across the income distribution. Our nonlinear IV and fixed-effect estimates show an increasing, concave relationship between family income and children's educational attainment and IQ. The linear estimates, however, suggest small, if any, effect of family income, because they assign little weight to the large marginal effects at the lower part of the income distribution.
Subjects: 
Family income
child development
nonlinearities
fixed effects estimation
instrumental variables estimation
linear models
JEL: 
J13
C21
C23
Document Type: 
Working Paper

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