Income Insecurity and Youth Emancipation: A Theoretical Approach

Fernandes, Ana; Becker, Sascha O.; Bentolila, Samuel; Ichino, Andrea (2008). Income Insecurity and Youth Emancipation: A Theoretical Approach. B.E. journal of economic analysis & policy, 8(1) Berlin: De Gruyter 10.2202/1935-1682.1783

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n 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 find that children of more altruistic parents are more likely to become independent. However, first-order stochastic dominance (FOSD) shifts in the distribution of the child's future income (or her parents') have ambiguous effects on the child's residential choice. Parental altruism is the very 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.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Fernandes, Ana

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

1935-1682

Publisher:

De Gruyter

Language:

English

Submitter:

Factscience Import

Date Deposited:

04 Oct 2013 15:07

Last Modified:

27 Apr 2018 09:20

Publisher DOI:

10.2202/1935-1682.1783

Web of Science ID:

000258442000004

Additional Information:

Contributions, Article 19

Uncontrolled Keywords:

partial altruism; emancipation; coresidence; income insecurity; option value; stochastic dominance

BORIS DOI:

10.7892/boris.29320

URI:

https://boris.unibe.ch/id/eprint/29320 (FactScience: 141555)

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