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Citation Information

Type Working Paper - SALDRU Working Paper
Title Private transfers and graduate responsibilities: Evidence from the National Income Dynamics Study
Issue 270
Publication (Day/Month/Year) 2020
In this paper, we re-examine private transfer behaviour in light of recent public and media discourse on black tax. In particular, we aim to better understand whether graduates of post-secondary education face disproportionate responsibilities to meet family needs through increased ability to offer financial support. Firstly, we reject a unitary model of household decision making for remittances, suggesting that a collective model of household behaviour is likely to govern remittance-sending behaviour. This means an individuals’ characteristics, preferences and responsibilities are likely to underpin remittance decisions. Indeed, we find that graduates are more likely to be remitters than other individuals, and that part of this responsibility arises from graduate status alone – that is, over and above labour market characteristics and living arrangements. We additionally observe a weaker relationship between remittance value and graduate remitters’ income, suggesting the amount sent by graduates is not as strongly determined by the income they earn – consistent with graduates facing a responsibility regardless of their income. Lastly, we consider a measure of intra-household sharing, and find that a sizeable share of children receive transfers towards their education expenses from co-resident family members who are not their parents. Thus intra-household transfers may form an integral part of the black tax narrative, although they are not typically observed in survey data.

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