Working Paper: NBER ID: w11872
Authors: Lingxin Hao; V. Joseph Hotz; Ginger Z. Jin
Abstract: This paper examines reputation formation in intra-familial interactions. We consider parental reputation in a repeated two-stage game in which adolescents decide whether to give a teen birth or drop out of high school, and given adolescent decisions, the parent decides whether to house and support his children beyond age 18. Drawing on the work of Milgrom and Roberts (1982) and Kreps and Wilson (1982), we show that the parent has, under certain conditions, the incentive to penalize older children for their teenage risky behaviors in order to dissuade the younger children from the same risky behaviors. The model generates two empirical implications: the likelihood of teen risky behaviors and parental transfers to a child who engaged in teen risky behaviors will decrease with the number of remaining children at risk. We test these two implications, using data from the National Longitudinal Survey of Youth, 1979 Cohort (NLSY79). Exploiting the availability of repeated observations on individual respondents and of observations on multiple siblings, we find evidence in favor of both predictions.
Keywords: Adolescent Risky Behaviors; Parental Reputation; Strategic Transfers
JEL Codes: J1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental reputation (J12) | Adolescent risky behaviors (I12) |
| Parental punitive measures (J12) | Adolescent decision-making (D91) |
| Number of younger siblings (J13) | Likelihood of risky behaviors (I12) |
| Parental transfers (D15) | Adolescent risky behaviors (I12) |
| Parental reputation (J12) | Parental transfers (D15) |