Centre for Development Economics
Department of Economics, Delhi School of Economics


Earning Risks, Parental Schooling Investment,  And Old-Age Income Support From Children


Alok Kumar 
Department of Economics,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.

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