Abstract
Economic development typically is characterized by occupational migration away from agriculture. Migrants commonly are more educated than average. On the other hand, the remaining farmers are expected to master more sophisticated production techniques. Hence, the pace of development depends on human capital accumulation of the population as a whole and of farmers in particular. For this reason, it is important to understand the way human capital investment decisions are made in the rural sector. Human capital levels are determined to a large extent within the family, i.e., through investments of parents in their children (Becker, chap. 6). Investments in children are motivated by altruism (Becker, pp. 362-79), by concern about family succession (Chu), and by expectations of receiving benefits from descendants in the future (Bernheim, Schleifer, and Summers). Parents care for migrating children as well as for succeeding children. They can also influence the decisions of succession versus migration, both directly through their authority and indirectly through differential investments in sector-specific human capital. Intergenerational succession is common in the farm sector, as the value of the farm within the family is higher than its market value (Kimhi 1994b). Farms in developed economies generally are not large enough to permit division among several successors. Hence, this discussion will focus on the case of a single successor. One of the difficult decisions facing the farm family is the choice of a suitable successor. Birth order and age differentials of children affect this decision, since the choice is not independent of the timing of farm transfer (Kimhi 1994a). The emphasis in this paper is on differential ability. If one child has an absolute advantage in farming and the other in off-farm jobs, the choice is easy. It is more difficult when one child is more able to run the farm and can also do better off the farm. On the one
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