The Determinants of Early Age Human Capital Formation: Evidence from Brazil

Abstract

It is now widely acknowledged that the low human capital base is the most serious developmental constraint in developing countries.1 Investments in child schooling add to the stock of human capital and therefore to future income and living standards for society as a whole and among subgroups of the population. Families invest in children's education for many reasons, among them the expectation that education will increase the child's future earnings. Governments also invest in education in order to raise the skill level of the labor force and, hence, to increase worker productivity and income in society at large. Thus, the analysis of the determinants of investment in schooling among different subgroups in the population and levels of education attained are of major concern for policymakers. This study explores the effects of several economic, demographic, social, and regional factors on the educational attainment of Brazilian children between the ages of 7 and 14 years. In particular, it examines the determinants of school participation, grade attainment, and dropping out of school. The data came from the 3% public use national sample of the 1980 Brazilian Population Census containing 3,526,000 individuals in 808,000 households.2 Out of this large data base a random subsample was drawn of 200,000 individuals in 40,000 households, selected so as to represent all Brazilian states and urban and rural areas. From this latter subsample we obtained a subset of 23,700 children aged 7 to 14 to whom we matched their parental and household data. The following section gives some background information on Brazil. Section III describes in more detail the sample used in this analysis. Section IV focuses on the determinants of school participation. Section V examines the impact of household and regional charac-