Journal Article
The labour supply effect of Education Maintenance Allowance and its implications for parental altruism
Authors
Publication date
Sep 2015
Summary
Education Maintenance Allowance (EMA) was a UK government cash transfer paid directly to children aged
16–18, in the first 2 years of post-compulsory full-time education. This
paper uses the labour supply effect of EMA to infer the magnitude of
the transfer response made by the parent, and so test for the presence
of an ‘effectively altruistic’ head-of-household, who redistributes
resources among household members so as to maximise overall welfare.
Using data from the Longitudinal Study of Young People in England, an EMA payment of £30 per week is found to
reduce teenagers’ labour supply by 3 h per week and probability of
employment by 13 % points from a base of 43 %. We conclude that parents
withdraw cash and in-kind transfers from their children to a value of
between 22 and 86 % of what the child receives in EMA. This means we
reject the hypothesis of an effectively altruistic head-of-household,
and argue that making this cash transfer directly to the child produces
higher child welfare than if the equivalent transfer were made to
parents.
Published in
Review of Economics of the Household
Volume and page numbers
13 , 531 -568
DOI
http://dx.doi.org/10.1007/s11150-015-9288-7
ISSN
16
Subjects
Young People, Education, Labour Market, Welfare Benefits, and Social Policy
Links
http://repository.essex.ac.uk/id/eprint/13146
Notes
Open Access article; Available under Open Access
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