Do Parents Tax Their Children? Teenage Labour Supply and Financial Support

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 10040

Classification and Topics

• Classification: Wirtschaft ; Model Evaluation, Validation, and Selection ; Noncooperative Games ; Household Production and Intrahousehold Allocation ; Time Allocation and Labor Supply
• Subject: intra-household transfers ; pocket money ; child labour supply ; noncooperative game ; human capital

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Holford, Angus J.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/145174
• Last update: 10.03.2025, 11:43 AM CET