Children and labour supply

Abstract

This article analyses the role of parents' expected payoffs of children and their labour supply. It uses the current education and income status of the parent and the educational expectations, health and behaviour problems of the child in order to form the expectations regarding the payoffs. We use a three stage (child, adult and old) model for individuals in order to capture the trade-off between supply of labour in the adult stage and consumption (from savings, investments and transfers from government and child) in the old age. The labour supply increases with the educational expectations, hopefulness and expected future income of the parent.

Notes

¹ This work was undertaken when the author was at the University of Minnesota.