Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33226
Authors: 
Becker, Sascha O.
Bentolila, Samuel
Fernandes, Ana
Ichino, Andrea
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers 1869
Abstract: 
In this paper, we propose a theoretical model to study the effect of income insecurity of parents and offspring on the child's residential choice. Parents are partially altruistic toward their children and will provide financial help to an independent child when her income is low relative to the parents'. We show that first-order stochastic dominance (FOSD) shifts in the distribution of the child's future income (or her parents') will have ambiguous effects on the child's residential choice. The analysis identifies altruism as the source of ambiguity in the results. If parents are selfish or the joint income distribution of parents and child places no mass on the region where transfers are provided, a FOSD shift in the distribution of the child's (parents') future income will reduce (raise) the child's current income threshold for independence.
Subjects: 
altruism
emancipation
job security
option value
JEL: 
D1
J1
J2
Document Type: 
Working Paper

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