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The economic motives for child allowances [electronic resource] : altruism, exchange or value of independence? / Lisa Farrell, Paul Frijters and Micheal A. Shields
Bib ID 6100700
Format BookBook, OnlineOnline
Author
Farrell, Lisa
 
Online Access
Online Versions
Description Brisbane, Qld. : School of Economics, University of Queensland, 2002 
Series

Discussion paper (University of Queensland. School of Economics : Online) ; 446. 1833-1068

PANDORA electronic collection.

Technical Details

Mode of access: Online. Address as at 17/09/2012: http://www.uq.edu.au/economics/446-the-economic-motives-for-child-allowances-altruism-exchange-or-value-of-independence 

System requirements: Adobe Acrobat reader to read PDF file. 

Summary

This paper looks inside the "black box" of the family and examines the determinants of inter vivos transfers in the form of allowances given to children. We consider in a simple model two main competing explanations for the transfer of money from parents to children in the form of regular allowances, namely altruism and exchange. We also extend the altruism framework to include unobserved child heterogeneity in monetary autonomy or the 'value of independence'. We use a unique dataset drawn from the British Family Expenditure Survey, which enables us to explicitly test both the inter-generational predictions of the various models, and through a study of siblings, we are also able to consider the intra-household aspects of such payments. Using both random (inter-household) and fixed-effect (intra-household) estimators, we find robust evidence of an n- shape relationship between a child's external income and the receipt of allowances from parents. Importantly, this estimated profile does not fit the predications of simple models of altruism or exchange, but does fit an altruism model with unobserved heterogeneity. Further support for the importance of the value of independence is that girls and those with higher birth orders obtain much higher allowances, whereby we argue both girls and those born later mature earlier and are therefore likely to be causally related to a high value of independence. We believe that further investigation of the motives underlying intra-household transfers is important for the design of policies aimed at redistributing income, such as child welfare payments.

Notes

Title from title screen (viewed on Sept. 17, 2012)

"August 2002 (preliminary draft)".

Includes bibliographical references (p. 28)

Text and graphics.

Selected for archiving

Subjects Children's allowances -- Econometric models.  |  Australian
Other authors/contributors Frijters, Paul  |  Shields, Michael A  |  University of Queensland. School of Economics

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