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This paper presents two tests for strict exogeneity of the covariates in a correlated random effects panel data Tobit model. The tests are applied in an analysis of hours of work of US women. Estimation procedures when a model does not pass a test for strict exogeneity are discussed.

Economics - De serie 'Werkdocumenten' omvat stukken die in het kader van de werkzaamheden van de WRR tot stand zijn gekomen en die op aanvraag door de raad beschikbaar worden gesteld. De verantwoordelijkheid voor de inhoud en de ingenomen standpunten berust bij de auteurs.

AbstractRecent literature reports that foreign aid contributes to economic growth when economic policies are good. This paper claims that aid can contribute not just to growth but also to pro‐poor growth, through increasing the responsiveness of social indicators to economic growth. The empirical evidence we present is in favour of this claim, suggesting that both aid itself and a recipient government's budget share allocated to social services tend to increase the (absolute) size of the income elasticity of poverty and infant mortality, and that, moreover, aid tends to increase this budget share. Copyright © 2006 John Wiley & Sons, Ltd.

Objectives: This study examines the effectiveness of a formal financial education program for improving the financial literacy of primary school children and how this effectiveness is influenced by informal financial education provided by parents, such as giving pocket money and discussing money matters. Method: A quasi field experiment was carried out at the Museum of Saving in Turin where children participated in a financial education program (the treatment). The first two out of three classes that arrived at the museum were assigned to the treatment group and the third one to the comparison group. Difference-in-differences models are estimated using financial literacy data from a pretest taken about 1 week before the visit to the museum and a posttest taken on the day of the visit; just before starting with the program at the museum for the comparison group and just after program completion for the treatment group. Results: In line with previous studies, we find that our formal financial education program had a positive effect on the financial literacy of primary school children. The empirical findings provide weak evidence that this effect of formal financial education is stronger for children who received informal financial education from their parents. Conclusions: Our study contributes to the previous literature by presenting further evidence that a short extra-curricular course can be effective in increasing economic and financial literacy among students. Furthermore, we present suggestive evidence—worth of further research—that informal financial education can reinforce the effect of formal financial education. JEL Codes: A29, C93, G40.

This paper investigates the timing of wealth transfers between generations. We develop an overlapping generations model in which each generation can borrow against its future income but not against expected bequest. As a result, generations relatively poorer than their parents may end up not smoothing consumption. We prove that if wealth transfers can take place earlier in life, then each generation smooths consumption despite the constraint on borrowing and the first best solution is restored. The model implies that parents transfer resources when the children are credit constrained. This implication is tested using Dutch survey data on households' intentions to make intervivos transfers matched with administrative data that allow to construct a measure of the probability of being in need of a transfer. All in all, the paper highlights the importance of intervivos transfers as a device that households can resort to in order to mitigate inter--generational wealth inequalities.