Abstract
In this paper, we analyze the role of income as a determinant of parents’ care for children. We show that the answer depends on whether Altruism or Exchange motives are the factors that explain intergenerational transfers. We then develop a test to discriminate between these alternatives. Unlike previous approaches, this test focuses on measures of parents’ efforts on child care that are essentially non-monetary. Using data from the United States, we find a negative relationship between family income and the frequency of children’s emergency room utilization which cannot be explained by several alternative controlling factors. In our framework, this is interpreted as evidence against the null of prominently altruistic behavior.
Highlights
Parents worldwide spend money, time and effort on the care and safety of their children
We propose a two-period theoretical model where parents have to decide whether to take their children to the emergency room or not. Their decision is analyzed under two competing frameworks: either parents are motivated by altruism or their decisions are based on contemplating children as an investment
Rich parents should ceteris paribus take their children more often to the emergency room when faced with a given sign of illness
Summary
Time and effort on the care and safety of their children. The data do not reject and are consistent with a theoretical prediction of the exchange model, namely, that the differences in the use of ER services between rich and poor should be smaller in economies with a low level of social mobility. The interpretation of these results deserves a word of caution: both hypotheses may lay behind child upbringing in most other cases, our general conclusion is that the exchange hypothesis provides a better explanation of the observed parental behavior in the case of ER use
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