Mums and their Sons Dads and their Daughters

Mums and their Sons; Dads and their Daughters: Panel Data Evidence of Interdependent Marginal Utilities across 14 EU Countries José Alberto Molina*, María Navarro* and Ian Walker** * University of Zaragoza, Spain ** University of Warwick, UK EPUNet Conference Barcelona, May 9 th 2006

AIM OF THE PAPER Estimate the extent of altruism between parents and children Why? Literature: Altonji, J. , F. Hayashi, and L. Kotlikoff (AER 1992, 1995, 1996) Schwarze (2004), Schwarze and Winkelmann (2005), Winkelmann (2005)

OUTLINE Simple Theoretical Background Data Econometric Models Results Conclusions

Simple Theoretical Background

DATA How satisfied are you with your present financial situation? - child data censored by leaving home European Community Household Panel – ECHP (1994 -2001) 14 EU countries

Structure of households in ECHP

Mean satisfaction levels – samples with any children

Mean Satisfaction Levels – comparing leavers with stayers before leaving

Siblings

Mean satisfaction levels – samples with 2+ children

ECONOMETRIC MODELS Random Effects Ordered Probit Model Parametric Ordered Probit Model with Multiple Random Effects

Altruism parameter for Fathers

Altruism parameter for Mothers

OTHER RESULTS Fathers less altruistic towards step children than natural - but not significant Mothers much sensitive than fathers to income shocks Married or cohabiting Mothers more income satisfied Negative effect of Family Size in income satisfaction on both Highly significantly positive effect of the household owning the house

GLLAMM

Estimated altruism parameters – all children

Fathers money metric, Oswald (2002, 2004)

Mothers money metric

Estimated money measures (as % of parent income ) of the value of a 1 std dev change in child satisfaction

Fathers and Mothers money (%) metric (GLLAMM)

Fathers and Mothers money (%) metric (GLLAMM)

CONCLUSIONS Strong parental altruism More so in Southern Europe Not religion – Ireland also low Mothers seem more altruistic than fathers Fathers seem more altruistic towards their daughters than sons Mothers seem more altruistic towards their sons in some countries but the pattern is less clear