Earning Risks, Parental Schooling Investment, And Old-Age Income Support From Children
University of Victoria, British Columbia
3rd August, 2017 (Thursday) at 3:00 PM
Venue : Seminar Room (First Floor)
Department of Economics, Delhi School of Economics
All are cordially invited
Old-age income support is an important motive for parents to invest in schooling of their children in developing countries. At the time parents choose schooling (human capital) investment for their children, both parental future income and return from schooling are uncertain. This paper analyzes effects of parental income risk and human capital investment risk on parental schooling investment using alternative models (altruism, educational loan, social norm) of determination of old-age income support. It finds that effects of these risks on schooling investment depend on whether old-age income support is state-contingent (i.e. depends on the realizations of incomes of parents and children). When the income support is state-contingent, increasing parental income risk (human capital investment risk) has a positive (negative) effect on schooling investment. However, when the income support is not state-contingent, effects of these two types of risks may get reversed.