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A02: Family decision-making and investments

We study how resources are allocated within the family and investigate the role of within-family interaction for important life outcomes pertaining to education, health, and economic success. The plan for the rst funding period comprises two thematic parts. First, we focus on familial decisions about material and time investments, as well
as on education decisions during critical decision periods. Second, we examine familial decision-making about elderly care, including dynamics related to the decumulation of assets, the role of learning in care provision, the importance of sibling interactions, and "burnout" of caregivers.

 

Project Members

 

Discussion papers (A02)

 

Motivation

The family is an important entity of economic decision-making about investments into human capital, health and elderly care. Family members rely on collective decision-making and informal contracts to align their interests. Differences in child human capital outcomes arise from differences in: the level or efficiency of parental investments, the education system, and innate abilities. Child investments and elderly care decisions are persistent both within and across generations.

Policy relevance

Research on the optimal timing of human capital investments, and on the interaction between the different types of familial investments in the human capital and health production process, is informative about the optimal design of social policies. Education, health and labor policies affect the allocation of resources within the family towards health and human capital investments. The aging of the population highlights the importance of developing appropriate public policies concerning long-term care arrangements for the elderly.

Project Plan

Work package 1 - Stylized facts
  • Examine the association between parental investment decisions and parental beliefs, family constraints, parental skills and preferences, and a child's initial conditions.
  • Descriptive analyses using household data on parents and children that contain information about different types of parental investments and parenting styles.
Work package 2 - Parental investment models
  • Parents can make use of given resources and traits to jointly decide about parenting styles, parental time investments and the educational paths of their children.
  • Study how (policy-induced) shifts in parental traits, family resources and investments can enhance opportunities.
  • Examine extent to which parents are able to respond to incentives regarding public investments in child human capital.
Work package 3 - Intergenerational effects
  • Understand if and why differences across individuals tend to persist across multiple generations, and how the intergenerational transmission can be influenced by family investments and policies.
  • Study how parental investments and educational decision-making in a first generation affect human capital outcomes in subsequent generations.
Work package 4 - Intertemporal dimensions of elderly care
  • Family members care about the well-being of other family members as well as their own consumption and leisure time.
  • Model individual family members' motives to provide care taking into account restrictions on time, financial constraints, and public policies.
  • Focus on two intertemporal dimensions of elderly care provision that have been neglected in prior literature: asset decumulation and learning about the quality of caregiving.
Work package 5 - Sibling interactions and elderly care
  • Examine interactions among siblings (who may have their own children to care for) in making care decisions for elderly parents.
  • Study the extent to which care provided by different children is substitutable and the costs associated with changing caregivers both in terms of health quality and foregone opportunities.
  • Estimate a framework that allows these elements to infuence long-term care arrangements for the elderly.

 

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