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Parents' risk aversion and children's educational attainment

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  • Checchi, Daniele
  • Fiorio, Carlo V.
  • Leonardi, Marco

Abstract

In this paper we study the role of parental risk aversion on children's educational choices. In a country like Italy where parental support is the main source of funds supporting college enrollment, we show that parents' risk aversion (elicited by surveys on lottery tolerance) has a significant negative effect on children's college enrollment. This negative effect is robust when we model non-response and introduce measures of liquidity constraints. With the help of a formal model, we interpret this evidence as suggestive that risk averse parents react to the uncertainty of future labour prospects of their children, whose ability is not fully observable. We show that parental risk aversion may contribute to explain the persistence of differences in the odds of attaining a college degree between children of parents with equal educational attainments.

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  • Checchi, Daniele & Fiorio, Carlo V. & Leonardi, Marco, 2014. "Parents' risk aversion and children's educational attainment," Labour Economics, Elsevier, vol. 30(C), pages 164-175.
    • Handle: RePEc:eee:labeco:v:30:y:2014:i:c:p:164-175
    DOI: 10.1016/j.labeco.2014.04.001
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    2. Francisco M. P. Mugizi, 2022. "Stronger together? Shocks, educational investment, and self-help groups in Tanzania," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(2), pages 511-548, December.
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    4. Contini,Dalit & Ricciardi,Riccardo & Romito,Marco & Salza,Guido & Zotti,Roberto, 2020. "Improving university dropout and student careers. What room for institutional action?," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202004, University of Turin.
    5. Raymond Boadi Frempong & David Stadelmann, 2021. "Risk preference and child labor: Econometric evidence," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 878-894, May.
    6. Gustavo A. Marrero & Juan C. Palomino & Gabriela Sicilia, 2022. "Inequality of Opportunity in Educational Achievement in Western Europe: contributors and channels," Working Papers 612, ECINEQ, Society for the Study of Economic Inequality.
    7. Holford, Angus J., 2017. "Access to and Returns from Unpaid Graduate Internships," IZA Discussion Papers 10845, Institute of Labor Economics (IZA).
    8. Rayner Tabetando, 2019. "Parental risk aversion and educational investment: panel evidence from rural Uganda," Review of Economics of the Household, Springer, vol. 17(2), pages 647-670, June.
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    More about this item

    Keywords

    Educational attainment; Family background; Risk aversion;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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