Fernandes, Ana, Becker, Sascha O., Bentolila, Samuel and Ichino, Andrea. (2008) Income insecurity and youth emancipation : a theoretical approach. The BE Journal of Economic Analysis & Policy, Vol.8 (No.1). Article no. 19. ISSN 1935-1682

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Abstract

In 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
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Journal or Publication Title:	The BE Journal of Economic Analysis & Policy
Publisher:	Walter de Gruyter GmbH & Co. KG
ISSN:	1935-1682
Official Date:	January 2008
Dates:	Date Event January 2008 Published
Volume:	Vol.8
Number:	No.1
Page Range:	Article no. 19
Identification Number:	10.2202/1935-1682.1783
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
Funder:	European Commission TSER Project
Grant number:	ERB4142 PL97/3148
URI:	http://wrap.warwick.ac.uk/id/eprint/45511

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