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TitleEssays on the Development of Inequalities over the Lifecycle
AuthorBolt, Helena Uta
AbstractWhy do individuals who grew up in low income families tend to have lower income themselves? Why do they also tend to be unhealthier than those who grew up in richer families? This thesis studies how inequalities in income and health develop from childhood to adulthood. The first chapter quantifies the effect of various channels - education, cognitive skills, parental investments and family background - on intergenerational earnings persistence in Great Britain. We find that earnings persistence is largely driven by differences in parental investments during childhood, which encourage greater cognitive development and lifetime earnings. The second chapter jointly studies different channels through which parents invest in their children - by spending time with them to foster cognitive skills, by paying for their education, and by making monetary transfers. We find that 28% of the variance of lifetime wages can already be explained by characteristics of the parents before individuals are born and 62% of the variance can be explained by age 23 characteristics of the individual. In terms of investments, we find evidence of dynamic complementarity between time and educational investments – the returns to education are higher for high ability individuals. This is a potentially important mechanism in perpetuating intergenerational outcomes, as borrowing constraints prevent low-income families from investing in education, thus simultaneously reducing the incentive to invest in time. The final chapter studies health inequality. I find that 34% of the differences in obesity rates between those coming from rich versus poor families is driven by differences in investments over the lifecycle. Differences in health investments received from the parents during childhood matter more than differences in investments in adulthood. A policy counterfactual in which the government directly invests in low income children’s health reduces obesity rates and has substantial welfare effects.
TypeThesis; Doctoral
PublisherUCL (University College London)
Source Doctoral thesis, UCL (University College London).