The (Lack of) Anticipatory Effects of the Social Safety Net on Human Capital Investment
American Economic Review
vol. 113,
no. 12, December 2023
(pp. 3129-72)
Abstract
How does the expectation that a child will receive government benefits in adulthood affect parental investments in the child's human capital? Most parents whose children receive Supplemental Security Income (SSI) benefits overestimate the likelihood that their child will receive SSI benefits in adulthood. We present randomly selected families with the predicted likelihood that their child will receive SSI benefits in adulthood. Reducing parents' expectations that children will receive benefits in adulthood does not increase investments in children's human capital. This zero effect is precisely estimated. Likely explanations include parents working more themselves, nonfinancial goals influencing investment, and families facing investment constraints.Citation
Deshpande, Manasi, and Rebecca Dizon-Ross. 2023. "The (Lack of) Anticipatory Effects of the Social Safety Net on Human Capital Investment." American Economic Review, 113 (12): 3129-72. DOI: 10.1257/aer.20230010Additional Materials
JEL Classification
- G52 Household Finance: Insurance
- I26 Returns to Education
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
- J13 Fertility; Family Planning; Child Care; Children; Youth
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials