Australian Health & Human Capital Economics Seminar| The (Lack of) Anticipatory Effects of the Social Safety Net on Human Capital Investment by Manasi Deshpande
Welcome back to the Virtual Australian Health & Human Capital Economics Seminar Series, which goes into its second year. This event is organised by A/Professor Victoria Baranov (UMelb), Dr Sarah Walker (UNSW), Professor Stefanie Schurer (USyd), Dr Rebecca McKibbin (USyd), Professor Adeline Delavande (UTS), and Professor Brenda Gannon (UQ).
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The (Lack of) Anticipatory Effects of the Social Safety Net on Human Capital Investment.
Wednesday 10 August 2022
9.00pm – 10.00pm
Abstract: How does the expectation of government benefits in adulthood affect human capital investments in childhood? In a simple economic model, expected future benefits decrease childhood human capital investments through income and substitution effects. The experts we surveyed also predicted a large decrease. We test this prediction by conducting a randomized controlled trial with families of children who receive Supplemental Security Income (SSI), a cash welfare program for children and adults with disabilities. The vast majority of parents whose children receive SSI overestimate the likelihood that their child will receive SSI benefits in adulthood. We provide randomly-selected families with information on the predicted likelihood that their child will receive SSI benefits in adulthood and use this randomized information shock to identify the effect of expectations about future benefits. We find that reducing the expectation that children will receive benefits in adulthood does not increase investments in children’s human capital. This zero effect is precisely estimated, and we strongly reject the positive null hypothesis from our expert survey. Leading explanations for the zero effect include parents’ plans to increase their own work effort, and parents making resource-constrained investment decisions based at least partly on non-financial goals.
For further information regarding this seminar and Virtual Australian Health & Human Capital Economics Seminar Series, please contact Professor Stefanie Schurer (firstname.lastname@example.org)