Does educational mismatch affect human capital investment in children? Evidence from China

Abstract

ABSTRACT This study examines the impact of parental education-occupation (educational) mismatch on human capital investment (HCI) in children. Guided by interpretations from a family education investment model that allows parents to be over/undereducated, we conduct an empirical analysis using the panel data of parent‒child pairs from the 2010–2018 China Family Panel Studies (CFPS). Our results show that, on average, children’s education expenditure decreases (increases) when parents are overeducated (undereducated), which is moderated by parental educational attainment. We also observe differing sensitivities between fathers and mothers, with a tendency to prioritize sons’ education over daughters’ education when experiencing educational mismatch. The impact of educational mismatch is more pronounced in urban households, whereas differences between nuclear and other household types are minimal. These findings highlight the importance of educational mismatch in intergenerational human capital transmission and suggest improving such mismatches to optimize HCIs and promote intergenerational mobility.