Reinforcement or compensation? Parental responses to children’s revealed human capital levels

Wei Fan, Catherine Porter

Research output: Contribution to journalArticle

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Abstract

A small but increasing body of literature finds that parents invest in their children unequally. However, the evidence is contradictory, and providing convincing causal evidence of the effect of child ability on parental investment in a low-income context is challenging. This paper examines how parents respond to the differing abilities of primary school-aged Ethiopian siblings, using rainfall shocks during the critical developmental period between pregnancy and the first 3 years of a child’s life to isolate exogenous variations in child ability within the household, observed at a later stage than birth. The results show that on average parents attempt to compensate disadvantaged children through increased cognitive investment. The effect is significant, but small in magnitude: parents provide about 3.9% of a standard deviation more in educational fees to the lower-ability child in the observed pair. We provide suggestive evidence that families with educated mothers, smaller household size and higher wealth compensate with greater cognitive resources for a lower-ability child.

Original languageEnglish
Pages (from-to)233-270
Number of pages38
JournalJournal of Population Economics
Volume33
Issue number1
Early online date6 Sep 2019
DOIs
Publication statusPublished - Jan 2020

Keywords

  • Children
  • Human capital formation
  • Intrahousehold resource allocation
  • Parental investment

ASJC Scopus subject areas

  • Demography
  • Economics and Econometrics

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