Three Essays in Population Economics

Abstract

<p>The family is an important source of caregiving and support for its members. Its importance has been reinforced by recent demographic trends in the United States and around the world. Due to improvements in health and life expectancy, today most individuals spend the majority of their adult life with a parent present. Yet, our understanding of extended families is limited. Aside from a few exceptions, the literature in economics has predominantly focused on household decision-making and resource allocations. In this dissertation, I fill the gap in the literature by focusing on aging parents and their adult children, that are not necessarily coresiding with them in the same housing unit, to study how family members share information, allocate resources, and influence members’ economic outcomes.</p><p>Recognizing the importance of understanding how families allocate resources among their members for policy design and evaluation, my first chapter focuses on resource allocations of extended families. This work is the first to make use of novel survey data to identify a proxy measure of imperfect information in extended family networks. I find that a significant proportion of parents have imperfect information about the financial well-being of their adult children. In addition, this observed imperfect information is predictive of how well families can cooperate and allocate resources. I find that families with more accurate information share their resources efficiently, they are able to reconcile their different preferences and allocate resources as a collectively rational unit. Conversely, families with imperfect information do not allocate their resources efficiently, leaving potential welfare improvements unrealized. This work improves our understanding of decision-making in the extended family and contributes to recent efforts at the frontier of the literature in family economics examining resource allocations of extended families.</p><p>This first chapter builds on findings from my second chapter, which presents a descriptive examination of prevalence and correlates of information asymmetry and uncertainty within extended families. I use data from Add Health and the AddHealth Parent Study to document incidence and prevalence of misperceptions in the family by contrasting parents’ reporting of their adult child well-being with the adult child’s own reporting. I make two main contributions. With this work, I contribute to a recent and burgeoning line of literature on information sharing in the family by demonstrating the potential use of survey data to measure misperceptions and uncertainty in the family and exploring how they relate to different characteristics such as family structure, and demographics. In addition, I examine whether misperceptions are associated with parent-child relationship quality and how much family members can rely on each other for support. Results show that a significant proportion of parents have incorrect or uncertain information about their adult children’s health conditions and these misperceptions are negatively correlated with relationship quality, and sense of familial support.</p><p>The third chapter, which is co-authored with Scott Abrahams, focuses on whether intergenerational correlation in socioeconomic outcomes be explained by transmission of personality traits across generations of the family. We use data from the National Longitudinal Study of Adolescent to Adult Health (Add Health) and the Add Health Parent Study (AHPS) to characterize the transmission of personality traits from parents to their adult children. We document sizable correlations, particularly for conscientiousness and grit, which are highly predictive of educational attainment and income. Yet, relative to the transmission of cognitive ability, this intergenerational transmission in personality traits can only account for a negligible portion of the rate of intergenerational persistence in educational attainment.</p>