Power to the teens? A model of parents' and teens' collective labor supply

Abstract

Teens make life-changing decisions while constrained by the needs and resources of the households they grow up in. Household behavior models frequently delegate decision-making to the teen or their parents, ignoring joint decision-making in the household. I show that teens and parents allocate time and income jointly by using data from the Costa Rican Encuesta Nacional de Hogares from 2011 to 2019 and a conditional cash transfer program. First, I present gender differences in household responses to the transfer using a marginal treatment effect framework. Second, I explain how the gender gap from the results is due to the bargaining process between parents and teens. I propose a collective household model and show that sons bargain cooperatively with their parents while daughters do not. This result implies that sons have a higher opportunity cost of attending school than daughters. Public policy targeting teens must account for this gender disparity to be effective.

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