Private Interhousehold Transfers: What Happens to Sender Households' Human Capital Investment?
This is an updated version of ANU Working Paper in Economics and Econometrics 576.
23 Pages Posted: 9 Jul 2012 Last revised: 24 Aug 2018
Date Written: August 22, 2018
Abstract
I examine household resource reallocation when financial transfers are sent to other households located elsewhere. The literature has so far focused on the impact of private transfers on the recipients, but not on the senders. In order to handle the endogeneity of transfers, I use the 1997-98 coupling of El Niño and the Southern Oscillation (ENSO) that caused historic agricultural drought in Vietnam. I find that outward transfers by parents reduced the sender households' expenditures on the education of each of their children. The finding implies informal risk sharing could have a negative long-run effect on young members of assisting households.
Keywords: private financial transfer, human capital investment, natural disaster, Vietnam Living Standards Survey
JEL Classification: D10, D64, I22, J13, O15
Suggested Citation: Suggested Citation
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