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Research Paper IZA Discussion Papers 10040

Do parents tax their children? Teenage labour supply and financial support

Authors

Publication date

Jul 2016

Summary

This paper models child employment and parental pocket money decisions as a non-cooperative game. Assuming that the child human capital is a household public good and that the relationship between child human capital and employment is concave, we compare the welfare obtained under different decision-making mechanisms and test the predictions of the model for a cohort of English teenagers in compulsory education. Our results support a situation in which parents 'tax' their children's earnings, withdrawing financial support as the child increases his working hours. This strategy forces the child to internalise the social cost of his activities.

Subjects

Young People, Education, Labour Market, Labour Economics, Wages And Earnings, and Household Economics

Links

http://www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=10040


Related publications

  1. Do parents tax their children? Teenage labour supply and financial support

    Angus Holford

    1. Young People
    2. Education
    3. Labour Market
    4. Labour Economics
    5. Wages And Earnings
    6. Household Economics
  2. Mit der Höhe des Taschengelds: wie Eltern ihre Kinder besteuern

    Angus Holford

  3. Parents ‘tax’ school-age children who take part-time work

    Angus Holford

  4. Parents ‘taxing’ children who get part-time work

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