DP2796 | Intra-Household Transfers and the Part-Time Work of Children

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We analyse the labour supply of 16-year-old British children together with the cash transfers made to them by their parents. We develop a theoretical model with an altruistic parent and a selfish child, which serves as a basis for the empirical specification in which labour supply and transfers are jointly determined. We show how parental transfers and the child?s labour supply are dependent on each other. Consideration of this is important when assessing the influence of other factors.