Essays in family and labour economics

This thesis explores family and labour economics issues in the context of different countries, the unified motive is to gain policy implication by applying diversified micro-econometric tools into different datasets. The UK has experienced the 1999 Working Family Tax Credit and the 2003 Working and Child Tax Credit reforms. The first chapter provides the first piece of evidence on the effect of single mothers being eligible to income transfer programmes on early childhood outcomes in the Britain. Using the Millennium Cohort Study (MCS), various children’s production functions are used to deal with endogeneity of inputs and unobserved heterogeneity problems. Findings suggest that mothers entitled to in-work benefit has positive effects on both children’s cognitive and non-cognitive outcomes, comparing to the mothers live on welfare. The second chapter presents new evidence on the child quantity- quality (Q-Q) trade-off based on the 1% sample of 1990 Chinese census. The main contribution of this chapter comes from applying a novel Generalised Method of Moments (GMM) approach that accounts for the non-linear distribution of both outcome and endogenous variables. The identification strategy exploits variation in family size that is induced by twin births and first child gender, which allows the test of Q-Q trade-off in a wide range of fertility distribution. I find significantly negative effects of fertility on educational outcome of children, and this trade-off nonlinearly decreases with family size and shows heterogeneous effects by birth order. This chapter provides technique foundation for policies that attempt to reduce contraceptive costs, control population growth and subsidize families with fewer children. The third chapter examines the retirement consumption puzzle using the Chinese Household Income Project data. A failure to smooth the consumption upon retirement would arise considerable concerns for the well-being of elderly people and adjustments of public policies. This chapter employs a regression discontinuity approach and shows that elderly households are able to maintain stable consumption onset of retirement by adjusting expenditure across sub-aggregated categories and household behaviour. This study confirms the prediction of Life Cycle Model and have important implications for using disaggregated consumption data to test the existence of retirement consumption puzzle and for testing consumption theories.