Life-Cycle Consumption and Children
Research output: Working paper › Research
Documents
- Jørgensen2014
Submitted manuscript, 868 KB, PDF document
I show that conventional estimators based on the consumption Euler equation, extensively used in studies of intertemporal consumption behavior, produce inconsistent estimates of the effect of children on consumption if potentially binding credit constraints are ignored. As a more constructive contribution, I supply a tractable approach to obtaining bounds on the effect of children and a structural estimation strategy when households face constraints. Finally, I estimate the effect of children on consumption using the Panel Study of Income Dynamics (PSID) for the US and high quality Danish administrative register data. Results suggest that children does not affect household consumption in the same magnitude previously assumed.
Original language | English |
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Place of Publication | Kbh. |
Publisher | Centre for Applied Microeconometrics. Department of Economics, University of Copenhagen |
Number of pages | 56 |
Publication status | Published - 2014 |
Series | CAM working papers |
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Number | 02 |
Volume | 2014 |
Bibliographical note
JEL classification: D12; D14; D91; E21
- Faculty of Social Sciences - consumption, children, life cycle, credit constraints, Structural estimation
Research areas
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ID: 100306216