Child Support and Educational Outcomes: Evidence from the British Household Panel Survey

There is some evidence to support the view that Child Support (CS), despite low compliance rates and a strong interaction with the welfare system, has played a positive role in reducing child poverty among non-intact families. However, relatively little research has addressed the role of CS on outcomes for the children concerned. There are good reasons for thinking that CS could leverage better outcomes than other forms of income support and, using a sample of dependent children in non-intact families from the British Household Panel Survey (BHPS), we find that CS received has an effect which is at least 10 times as large as that associated with variations in other sources of total household net income for two key educational outcomes: namely school leaving at the age of 16, and attaining 5 or more good GCSEs. We show that this remarkable and strong result is robust and, in particular, can be given a causal interpretation

There's no such thing as a Free Lunch: Altruistic parents and the response of household food expenditures to nutrition program reforms

Many countries provide extensive in-kind public transfers for specific needs of particular client groups such as the elderly, the disabled, and children. However, this may crowd out private expenditures on the goods in question and, to some extent, undermine the case for not simply giving cash. If the target group belongs to a larger household the mechanism behind this crowding out could be either altruism or agency. This paper is concerned with three nutrition programmes for children in UK households: free lunch at school for children from poor households; free milk to poor households with pre-school children; and free milk at day-care for pre-school children in attendance regardless of parental income. We exploit a reform that removed eligibility to the first two programs from working poor households. We find significant crowding-out of private food expenditures – a free school lunch reduces food expenditure by around 15% of the purchase price of the lunch, and a free pint of milk reduces milk expenditure by about 80% of the market price. We conclude that this is due to altruism rather than agency problems because milk expenditure crowd-out is similar across milk programs that have different delivery mechanisms.In-kind transfers, program participation, altruism, agency

Differences by Degree: Evidence of the Net Financial Rates of Return to Undergraduate Study for England and Wales

This paper provides estimates of the impact of higher education qualifications on the earnings of graduates in the UK by subject studied. We use data from the recent UK Labour Force Surveys which provide a sufficiently large sample to consider the effects of the subject studied, class of first degree, and postgraduate qualifications. Ordinary Least Squares estimates show high average returns for women that does not differ by subject. For men, we find very large returns for Law, Economics and Management but not for other subjects. Quantile Regression estimates suggest negative returns for some subjects at the bottom of the distribution, or even at the median in Other Social Sciences, Arts and Humanities for men. Degree class has large effects in all subjects suggesting the possibility of large returns to effort. Postgraduate study has large effects, independently of first degree class. A large rise in tuition fees across all subjects has only a modest impact on relative rates of return suggesting that little substitution across subjects would occur. The strong message that comes out of this research is that even a large rise in tuition fees makes little difference to the quality of the investment – those subjects that offer high returns (LEM for men, and all subjects for women) continue to do so. And those subjects that do not (especially OSSAH for men) will continue to offer poor returns. The effect of fee rises is dwarfed by existing cross subject differences in returns.college premium, rate of return

Do Dads matter? Or is it just their money that matters? Unpicking the effects of separation on educational outcomes by and

The widely held view that separation has adverse effects on children has been the basis of important policy interventions. While a small number of analyses have been concerned with selection into divorce, no studies have attempted to separate out the effects of one parent (mostly the father) leaving, from the effects of that parent's money leaving, on the outcomes for the child. This paper is concerned with early school leaving and educational attainment and their relationship to parental separation, and parental incomes. While we find that parental separation has strong effects on these outcomes this result seems not to be robust to adding additional control variables. In particular, we find that when we include income our results then indicate that father’s departure appears to be unimportant for early school leaving and academic achievement, while income is significant. This suggests that income may have been an important unobservable, that is correlated with separation and the outcome variables, in earlier research. Indeed, this finding also seems to be true in our instrumental variables analysis – although the effect of income is slightly weakened.parental separation, parental incomes, early school leaving, educational attainment

The Labor Supply Effect of In-Kind Transfers

We estimate a model of labor supply and participation in multiple programs for UK lone mothers which exploits a reform of in-work transfers. Cash entitlements increased but eligibility to in-kind child nutrition programs was lost. We find that in-work cash and inwork in-kind transfers both have large positive labor supply effects. There is, however, a utility loss from program participation which is estimated to be larger for cash than for child nutrition. This implies that the partial cash out of the in-kind benefits reduced labor supply.labor supply, program participation, in-kind transfers

Child support liability and partnership dissolution

This paper studies the determinants of partnership dissolution and focuses on the role of child support. We exploit the variation in child support liabilities driven by an important UK policy reform to separately identify the effects of children from the effect of child support liability. We find strong evidence that an increase in the child support liability significantly reduces dissolution risk. Our results suggest that child support criteria that are based on the non-custodial parent's income, compared to criteria based on aggregate incomes of both parents, would imply much smaller separation rates.

Education Choice under Uncertainty - Implications for Public Policy

We analyse how progressive taxation and education subsidies affect schooling decisions when the returns to education are stochastic. We use the theory of real options to solve the problem of education choice in a dynamic stochastic model. We show that education attainment will be an increasing function of the risk associated with education. Furthermore, this result holds regardless of the degree of risk aversion. We also show that progressive taxes will tend to increase education attainment.Education Choice; Dynamic Optimization, Optimal Stopping, Uncertainty

The College Wage Premium, Overeducation, and the Expansion of Higher Education in the UK by and

This paper provides findings from the UK Labour Force Surveys from 1993 to 2003 on the financial private returns to a degree – the “college premium”. The data covers a decade when the university participation rate doubled – yet we find no significant evidence that the mean return to a degree dropped in response to this large increase in the flow of graduates. However, we do find quite large falls in returns when we compare the cohorts that went to university before and after the recent rapid expansion of HE. The evidence is consistent with the notion that new graduates are a close substitute for recent graduates but poor substitutes for older graduates. There appears to have been a very recent increase in the number of graduates getting “non-graduate” jobs but, conditional on getting a graduate job the returns seem stable. Our results are consistent across almost all degree subjects – the exception being maths and engineering where we find that, especially for women, there is a large increase in the proportion with maths and engineering degrees getting graduate jobs and that, conditional on this, the return is rising.human capital, higher education, college premium