Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/35407
Authors: 
Cohen-Goldner, Sarit
Gotlibovski, Chemi
Kahana, Nava
Year of Publication: 
2009
Series/Report no.: 
IZA discussion papers 4185
Abstract: 
Previous papers tested the validity of the Family Investment Hypothesis (FIH) among immigrants by comparing the labor market outcomes of immigrant couples and native or mixed couples. Here we propose an alternative test for the FIH which is based on a comparison between married and single immigrants. The logic underlying this alternative method states that if credit constraints are binding, then only married immigrants can cross-finance their investment within the family. In order to overcome potential selection bias that would arise if unobserved characteristics that affect the marital status of the individual also affect his/her labor market outcomes, we construct a difference-in-differences estimator that exploits variation in the labor market outcomes of married and single natives. Implementation of this method using US and Israeli data leads to a rejection of the FIH in both countries.
Subjects: 
Family investment model
labor supply
JEL: 
J22
J61
Document Type: 
Working Paper

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