Parent–child bargaining, parental transfers, and the post-secondary education decision

Abstract

Schooling decisions are often modelled within a unitary preference framework. In this article, an alternative to the unitary preference model is proposed in which parents and child have conflicting preferences over parental transfers and the level of post-secondary schooling and participate in cooperative bargaining as a means of resolving this conflict. Comparisons of the implications of the bargaining and unitary preference models motivate tests of parental altruism and income pooling. To test these hypotheses, reduced form transfer and schooling equations are estimated using data from the High School and Beyond Surveys. The evidence suggests that the unitary preference model be rejected.