Working Paper: NBER ID: w18485
Authors: Steven J. Haider; Kathleen M. McGarry
Abstract: The rising cost of college tuition and the accompanying investment parents often make have received considerable attention recently. While classic models in economics make important predictions about the magnitudes of these investments, their distribution across children, and their relationship with later cash transfers, there has been little empirical work examining these predictions, especially with regards to the differential treatment of siblings. Using unique data from a supplement to the Health and Retirement Study, we find that parents typically invest differentially in the schooling of siblings, but we find no evidence that these investments are offset by later cash transfers.
Keywords: Parental Investments; Cash Transfers; Education; Siblings; Economic Behavior
JEL Codes: H31; H4; I22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental investments in education (I21) | Cash transfers (F16) |
| Older children receive smaller amounts of cash transfers than younger siblings (J13) | Parental investment is influenced by liquidity constraints (D14) |
| Cash transfers are unrelated to prior educational investments (H52) | Parental giving is influenced more by the child's financial situation (D64) |
| Aggregate cash transfers over years are significant (F35) | Relationship between schooling transfers and cash transfers does not change (I21) |
| Parents do not adjust cash transfers based on prior schooling investments (H52) | Parental cash transfers are not compensatory for previous educational investments (D29) |