Inequality of opportunity and household education expenditures: Evidence from panel data in China

Abstract

This paper offers one of the first pieces of empirical evidence on the impact of inequality of opportunity on household education investment by using the panel data from China Family Panel Studies (CFPS) in three waves (2010, 2012 and 2014). Our result suggests that inequality of opportunity has a negative effect on household education expenditures. This result is robust to a series of robustness checks. Furthermore, for relatively disadvantaged households (household heads with less education, income, or rural hukou status), inequality of opportunity has a larger negative effect on their education expenditures. Policy suggestions to lower inequality of opportunity may include reducing labor market discrimination based on gender and hukou status, balancing education resources to create more equal educational opportunities, and offering children education subsidies in low-income families.