Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110705
Authors: 
Carneiro, Pedro
Ginja, Rita
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 8979
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.
Subjects: 
insurance
human capital
consumption
JEL: 
D12
D91
I30
J1
Document Type: 
Working Paper

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