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Title: Essays on Inter Vivos Transfers and Choice of College Major

Citation Type: Dissertation/Thesis

Publication Year: 2020

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Abstract: My dissertation analyzes inter vivos transfers from parents to children, the heterogeneity of pecuniary and nonpecuniary benefits across different fields of study, and how these factors jointly contribute to the choice of field in college. In my first chapter, Gender Differences in Inter Vivos Transfers, I examine to what extent parents exhibit preferential treatment for one gender with respect to financial gifts to children. Using the Health and Retirement Study from 1992-2014, I estimate differences in the frequency and magnitude of gifts to sons and daughters. Conditional on a transfer, there is no evidence of differences in amounts between sons and daughters. However parents give to daughters at higher rates. I explore potential mechanisms for this disparity: in particular, I address the altruism and exchange motives for inter vivos transfers. I find that the difference in giving rates is partially explained by higher expected rates of future care from daughters. Even after controlling for discrepancy in care-taking, income levels, and other observable characteristics, parents are still 10-20% more likely to give a transfer to their daughters. The discrepancy in giving rates is driven by unmarried children: once daughters marry they are less likely to receive a transfer. In my second chapter, I find evidence that parents affect their children’s career choice through inter vivos transfers. Embedding an occupational choice model into an overlapping generations framework with altruism, I show children with wealthy parents favor jobs that v have riskier income streams relative to their expected earnings because high-income parents can insure their children against negative earnings shocks. Using the 1997 cohort from the National Longitudinal Study of Youth, I rank major fields of study according to two measures of earnings uncertainty. I then use a multinomial logit to show that children, particularly men, of higher income parents select into fields with higher earnings uncertainty. This effect persists even for the subsample of first-generation college students. The empirical results suggest that child decisions are consistent with the theory that inter vivos transfers act as an insurance mechanism for college children. College majors carry both monetary (high expected earnings, job security) and nonmonetary (enjoyment, social good) benefits. My third chapter analyzes the tradeoffs between pecuniary and nonpecuniary benefits for respondents of the High School Longitudinal Study. Different groups of students, including groups that are currently underrepresented, identify significantly different characteristics as being important to their choice of college major. I find that gender is an important factor as women are significantly more likely to favor nonpecuniary benefits. Students with stronger academic records are also less sensitive to pecuniary reasons. In addition, there are differences in motivation for students of different races, but these effect are not constant across majors. In particular, although white students who major in business and economics tend to value pecuniary reasons, business majors of other races are less likely to value pecuniary reasons.

Url: https://www.proquest.com/docview/2419008142?pq-origsite=gscholar&fromopenview=true

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Authors: Loxton, A.

Institution: Indiana University

Department: Department of Economis

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Pages: 1-149

Data Collections: IPUMS CPS

Topics: Education, Gender, Work, Family, and Time

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