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Appears in Collections:Economics Journal Articles
Peer Review Status: Refereed
Title: Income Insecurity and Youth Emancipation: A Theoretical Approach
Author(s): Becker, Sascha
Fernandes, Ana
Bentolila, Samuel
Ichino, Andrea
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Keywords: partial altruism
income insecurity
option value
stochastic dominance
JEL Classification: J1, J2
Home economics
Parent and child
Issue Date: Jan-2008
Date Deposited: 6-Oct-2009
Citation: Becker S, Fernandes A, Bentolila S & Ichino A (2008) Income Insecurity and Youth Emancipation: A Theoretical Approach. BE Journal of Economic Analysis and Policy, 8 (1).;
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.
DOI Link: 10.2202/1935-1682.1783
Rights: Published in The B.E. Journal of Economic Analysis & Policy. Copyright © 2008 The Berkeley Electronic Press.

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