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Parental transfers of time, education, and money shape intergenerational mobility. Using panel data from birth to retirement, we estimate child skill production functions and embed them in a dynastic model of parental investment. We find that parental time investments have a dual purpose: investments increase children's human capital, but parents also enjoy time spent with children more than work. We then assess the effects of relaxing intergenerational borrowing constraints via student loans: student loans reduce persistence in earnings and education and raise parental welfare. However, while children newly able to attend college experience welfare gains, on average the higher debt levels reduce children's welfare.
Authors
Uta Bolt
Uta is an IFS Research Fellow and University of Bristol lecturer with an interest in the development of inequalities over the lifecycle.
Eric French
Eric is a CPP Institute Co-director and the Montague Burton Professor of Industrial Relations and Labour Economics at the University of Cambridge.
Jamie Hentall-MacCuish
Jamie is an assistant professor at HEC Paris. He is also a Research Associate at the IFS.
Cormac O'Dea
Cormac is a Research Associate of the IFS, an Assistant Professor of Economics at the Yale University and Research Fellow at the NBER.
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