Do Children's Allowances Motivate Them to Study Harder? Empirical Evidence from Japanese University Students

Abstract

This research takes the theory of the interaction between altruistic parents and egoistic children in Becker (1974, 1991) as a starting point, and investigates the effect of parents' altruistic monetary transfers to their children enrolled in university, on their total hours of study and the priority they put on studying, by employing micro-data on the characteristics of Japanese university students and their lifestyle. Regarding study hours, a positive significant impact can only be observed for students of Humanities, Arts, and Social Sciences who live with their parents, while a significant effect could not be observed for students who are living away from home. No evidence of an effect of transfers from parents on the priority that students put on study could be observed on any group. Altogether, these findings show that information asymmetries in parent-child interactions can reduce the effectivity of monetary transfers from parents on their children's study habits.