Capital Investment In Children Research Articles

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

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.

Class in caste: Inequalities in human capital investments in children in India

Caste is a unique marker of social stratification in India. There are significant eco- nomic inequalities and considerable disparities in educational achievements between historically disadvantaged caste groups and Others. Unequal investments in their chil- dren’s human capital by caste can perpetuate income inequalities and reproduce class differences between caste groups. This paper analyses caste-based disparities in house- hold expenditure on children’s school education using nationally representative social expenditure data on education from 2007–08 and 2017–18 in India. The paper uses a recentered influence function (RIF) based decomposition analysis to pinpoint the key factors underpinning the disparity in private educational expenditure between disadvantaged caste groups and Others. Further, to overcome the problem of heterogeneity of data the study also employs propensity score matching (PSM) as robustness check for the decomposition analysis. The findings from decomposition and matching approaches reveal that differences in endowments, specifically income differences, between caste groups explain most of the caste-based gap in children’s human capital investments. The study has implications for public policy to address educational and economic disparities between disadvantaged caste groups (ST, SC and OBC) and Others in India.

The Economic Impact of Depression Treatment in India: Evidence from Community-Based Provision of Pharmacotherapy

This study evaluates the impact of depression treatment on economic behavior in Karnataka, India. We cross-randomize pharmacotherapy and livelihoods assistance among 1,000 depressed adults and evaluate impacts on depression severity, socioeconomic outcomes, and several potential pathways. When combined, the interventions reduce depression severity, with benefits that persist after treatment concludes. Pharmacotherapy alone has a weaker effect that is only marginally significant and dissipates sooner. Depression treatment does not significantly increase earnings, consumption, or human capital investment in children. (JEL I12, I15, I18, J13, J22, J31, O15)

Investment in human capital by socioeconomic status in Uruguay

The present study uses estimations of the National Accounts system by age and socioeconomic status to analyze inequalities in human capital investment in children. Socioeconomic status is proxied by the household head's education; children are the population under age 21; human capital comprises education and health consumption of National Accounts. The estimates suggest that funding human capital requires the re-assignation of resources between ages and socioeconomic groups and makes evident the central role of government interventions in redistribution. Nevertheless, differences in investment are relevant primarily because of investments funded with private resources. Estimates suggest that the improvement in socioeconomic level has different effects on the destination of resources allocated to children according to the starting level: first, consumption increases, then investment in education, and finally, investment in health.

Family-Size Effect on Intergenerational Income Mobility under China’s Family Planning Policy: Testing the Quantity–Quality Trade-Off

The causal link between family size and human capital investment in children is critical for family planning policy. However, empirical studies aiming to test the quantity–quality trade-off are far from sufficient. This paper tried to estimate the family-size effect on intergenerational income mobility using China Family Panel Survey (CFPS) data. The empirical model of intergenerational income mobility with respective to family size was formulated, and the fertility rates allowed by family planning policy were used as an instrument variable for family size. It was found that intergenerational income elasticity tended to decrease with an increase in family size. The impact of family size on intergenerational income elasticity was sensitive to the income rank positions, and nonlinearity in intergenerational transmission of income under unequal family was observed. A quantity–quality trade-off analysis was applied to further test the family-size effect. Pronounced family-size effects were observed in low-income regions with tight budget constraints and in regions with less-developed credit markets, followed by an obvious quantity–quality trade-off. The sex difference in intergenerational transmission of income may be attributed to the existence of the “preference to sons over daughters” phenomenon. The present work provides a theoretical basis for shaping family planning policies toward sustainability.

Mandatory Schooling of Girls Improved Their Children's Health: Evidence from Turkey's 1997 Education Reform

AbstractThis study examines the impact of mandatory maternal education on child health in Turkey, where a non‐trivial fraction of families restricted their daughters’ schooling due to social and cultural barriers. The analysis employs two large data sets and exploits a quasi‐experiment involving an education reform that increased compulsory schooling. Results show that an increase in mother's schooling improves child health at birth (as measured by factors such as low birth weight and premature birth) and lowers child mortality. The current study on the intergenerational benefits of compulsory schooling arguably provides the strongest evidence supporting the argument that mandatory female education has substantial nonpecuniary benefits in terms of the health of the offspring in societies where female education is stigmatized. The implications of this research extend beyond girls’ schooling and suggest that compulsory human capital investments in children can correct market failures when families underinvest in their children because of social or cultural barriers.

The long-term health and economic consequences of improved property rights

This paper studies the long-term health and economic consequences of China’s Household Responsibility System (HRS) reform—a property reform that assigned collectively owned farmland to individual households with secure tenures and boosted labor productivity among rural populations. Using regional variation in reform timing and pace, I provide evidence that early-life exposure to HRS improved individuals’ later-life health, education, and labor market outcomes. However, exposure to HRS at critical school ages reduced human capital investment in children, making them less likely to receive education and more likely to remain in agriculture.

Inter-Generational Benefits of Improving Access to Justice for Women: Evidence from Peru

In many developing countries, access to justice remains unequal, especially for women. What are the implications of this inequality for gender-based violence and investment in children? This paper provides evidence from Peru's women's justice centers (WJCs), specialized institutions that employ mostly female officers and provide police and legal services to reduce gender-based violence. Examining the gradual rollout of WJCs across districts and villages, we find that the opening of a center increases reporting and prosecutions for gender-specifi c crimes; it also reduces the incidence of gender-based violence, as measured by domestic violence, female deaths due to aggression, and hospitalizations due to mental health, by about 10%. We find, moreover, that this decrease in women's exposure to violence has intergenerational effects: WJCs substantially increase human capital investments in children, raising enrollment, attendance, and test scores.

Status and path of intergenerational transmission of poverty in rural China: A human capital investment perspective

This paper focused on the intergenerational transmission of poverty in rural China by estimating the intergenerational transmission of earnings and stated its mechanism from the perspective of human capital investment before children participated in the labor market. The data used in this study were longitude data collected in 2 000 households of 100 villages among 25 counties across five provinces in 2005, 2008, 2012, 2016, and 2019. Qualitative and quantitative methods were adopted. We found a significant intergenerational transmission of earnings in rural China, especially for the pairs of father–children and parents–children. The intergenerational earnings’ elasticities were much less than those in urban areas, which indicated better social mobility in rural areas than that in urban China. The children with parents who could earn much were more likely to be invested before they participated in the labor market, gain a high education and have more skills. Three cases further showed that the mechanism of human capital investment in children breaking the intergenerational transmission of poverty and promoting social mobility.

Dinner timing and human capital investments in children

Although previous research documents that having dinner together as a family positively relates to long-run child and family outcomes, one aspect of family dinner that has not been explored previously is the role that dinner timing may play in facilitating or hindering parental time investments in their children. We use time diary data for roughly 41,000 families from the nationally representative American Time Use Survey (2003–2019) to examine whether the timing of family dinner is correlated with differential parental time investments in children during the evening. We find that parents who start dinner as a family before the median time (6:15 p.m.) spend more quality time in the evening with their children, including more time reading and playing with their children. The relationship cannot be explained by observable family constraints, as it is stable regardless of parental labor force activity and the day of the week. Additionally, parents who eat dinner later do not reallocate quality time to other times of the day. These findings suggest that having dinner earlier may be an important mechanism facilitating parental time investments in children.

The targeting benefit of conditional cash transfers

Conditional cash transfers (CCTs) are a popular type of social welfare program that make payments to households conditional on human capital investments in children. From a targeting perspective, compared to unconditional cash transfers (UCTs), CCTs are costly because they exclude some low-income households as access is tied to normal investments in children. However, we argue that conditionalities on children’s school enrollment offer an unexplored targeting benefit over UCTs: CCTs target money to households who forgo a discrete amount of child income. We show that the size of the targeting benefit relative to the targeting cost of CCTs is directly related to the consumption differences between schooling and non-schooling households and two elasticities already popular in the literature: the income effect of a UCT and the price effect of a CCT. We estimate these elasticities for a large CCT program in rural Mexico, Progresa, using variation in transfers to younger siblings to identify income effects. In this setting, we find that the targeting benefit is a similar magnitude to the cost of excluding some low-income households; this implies that 33% of the Progresa budget should go to a CCT over a UCT based on targeting grounds alone.

Early and Late Human Capital Investments, Borrowing Constraints, and the Family

We develop a dynastic human capital investment framework to study the importance of family borrowing constraints and uninsured labor market risk, as well as the process of intergenerational ability transmission, in determining human capital investments in children at different ages. We calibrate our model to data from the Children of the National Longitudinal Survey of Youth. While the effects of relaxing any borrowing limit at a single stage are modest, eliminating all life-cycle borrowing limits dramatically increases investments, earnings, and intergenerational mobility. The impacts of policy changes at college-going ages are greater when anticipated earlier, and shifting subsidies to earlier ages increases aggregate welfare and human capital.

Child nutritional status among births exceeding ideal family size in a high fertility population.

Ideal family size (IFS) is measured in social surveys to indicate unmet need for contraception and impending shifts in fertility behaviour. Whether exceeding IFS affects parental behaviour in ways that result in lower investments in child nutrition, well-being, and educational attainment is not known. This study examines parental IFS and the association between exceeding stated ideals and child nutritional status in a high-fertility, high-mortality population in the Bolivian Amazon. Height-for-age z-scores, weight-for-age z-scores, weight-for-height z-scores, stunting, haemoglobin, and anaemia status in 638 children aged 0-5years are predicted as a function of birth order in relation to parental IFS, adjusting for household characteristics and mother and child random effects. Children of birth orders above paternal IFS experience higher weight-for-age z-scores when living further away from the market town of San Borja, consistent with underlying motivations for higher IFS and lower human capital investment in children in more remote areas (β=.009, p=.027). Overall, we find no statistical evidence that birth orders in excess of parental ideals are associated with compromised child nutrition below age 2, a period of intensive breastfeeding in this population. Despite a vulnerability to nutritional deficiencies postweaning for children age 2-5, there was no association between birth order in excess of parental ideals and lower nutritional status. Further studies examining this association at various stages of the fertility transition will elucidate whether reported ideal or optimal family sizes are flexible as trade-offs between quality and quantity of children shift during the transition to lower fertility.

Beyond the Quantity–Quality tradeoff: Population control policy and human capital investment

The quantity–quality tradeoff theory implies that a reduction in fertility would induce more human capital investment per child, and it is widely believed that population control policy could promote human capital levels in developing countries. China's one-child policy (OCP) has significantly reduced the fertility in the country, and popular belief holds that this policy has contributed to the enhancement in China's human capital since 1979. However, the quantity–quality tradeoff dose not present the complete truth—another crucial factor relates to which segment of the population is reduced, a critical issue that has been ignored in the literature. China's OCP is significantly more strictly implemented in urban areas than in rural areas, where human capital investment in children is significantly lower. This two-tier OCP could have significantly increased the rural–urban fertility ratio and brought about important consequences. We first emphasize the importance of such a population compositional effect, which may offset the potentially positive quantity–quality tradeoff effect on human capital. We present a simple analytic framework and quantify the relative sizes of the quantity–quality tradeoff and compositional effects. We find that the former is dominated by the latter, and that the OCP has reduced the average human capital level of China's next generation by approximately 1–2%. This novel evidence indicates that the conventional wisdom on population control may be incomplete and that its policy implications could be misleading.

Children’s education and parental old age survival – Quasi-experimental evidence on the intergenerational effects of human capital investment

While a large literature has investigated the role of parental human capital on children’s well-being, relatively little is known regarding the effects of human capital investment in children on long run outcomes of parents. In this study we explore the human capital variations created by the 1974 Tanzania education reform to estimate the effect of children’s primary schooling attainment on parental survival. Using 5,026,315 census records from 1988, 2002, and 2012, we show that the 1974 reform resulted in an additional 1.1 years (31%) of educational attainment among exposed cohorts. Using the reform as instrument for child education we find that each additional year of primary schooling in children resulted in a 3.7 percentage point reduction (p < .001) in the probability of maternal death, and a 0.8 percentage point reduction (p = .011) in the probability of paternal death by the time exposed child cohorts reach age 50. The results suggest that—at least in a setting where social security coverage is largely absent—a substantial fraction of human capital gains generated by reforms are shared with the parental generation.

The Evolution of China’s One-Child Policy and Its Effects on Family Outcomes

In 1979, China introduced its unprecedented one-child policy, under which households exceeding the birth quota were penalized. However, estimating the effect of this policy on family outcomes turns out to be complicated. China had already enacted an aggressive family planning policy in the early 1970s, and its fertility rates had already dropped sharply before the enactment of the one-child policy. The one-child policy was also enacted at almost the same time as China's market-oriented economic reforms, which triggered several decades of rapid growth, which would also tend to reduce fertility rates. During the same period, a number of other developing countries in East Asia and around the world have also experienced sharp declines in fertility. Overall, finding defensible ways to identify the effect of China's one-child policy on family outcomes is a tremendous challenge. I expound the main empirical approaches to the identification of the effects of the one-child policy, with an emphasis on their underlying assumptions and limitations. I then turn to empirical results in the literature. I discuss the evidence concerning the effects of the one-child policy on fertility and how it might affect human capital investment in children. Finally I offer some new exploratory and preliminary estimates of the effects of the one-child policy on divorce, labor supply, and rural-to-urban migration.

Parental preferences, production technologies, and provision for progeny

This paper theoretically explores the implications of the recent developments in the study of human capital production technologies (Cunha and Heckman, 2007) in intrahousehold human capital investment in children (Becker and Tomes, 1976; Behrman et al., 1982). When credit constraints are not binding, parents adopt a reinforcing intrahousehold investment strategy. When credit constraints are binding, the trade-off between the degree of parental aversion to inequality and the degree of complementarity between pre-natal endowments and family investments determines the parental strategy. The observed investment pattern of reinforcement or compensation does not necessarily reveal the underlying preference or technological parameters. Finally, we discuss empirical methods that may separately identify the preference and technological parameters and discuss the econometric challenges associated with these methods.

Human capital investment in children: An empirical study of household child education expenditure in China, 2007 and 2011

Household education expenditure is an important component of human capital investment in children. In China, the rising child education expenditure and the subsequent financial burden on families have attracted much research and policy attention in the recent years. Using 2007 and 2011 data from the Urban Household Education Surveys, our empirical study provides new evidence on the education expenditure level, ratio of expenditure to household income, and inequality in this expenditure. We also elucidate changes in China's household education expenditure and explore factors associated with such changes. From the analysis, we obtain the following findings. First, education expenditure incurred outside the school significantly contributes to increasing household education expenditure. Second, compulsory education programs are effective in curbing in-school education expenditure; however, it does not prevent the rapidly increasing education investment outside school. Third, education expenditure disproportionally increases with family income. In other words, a larger share of the income earned by lower income families is spent on children's education, compared to higher income families.

Population Control Policies and Human Capital Investment: China's One-Child Policy Revisited

This paper re-examines the issue of whether population control policies induce more human capital investment per child. It is widely believed that China’s one-child policy promotes the human capital level of the new generation. According to the quantity-quality tradeoff theory, there is a tradeoff between the number of children and child quality; thus a reduction in fertility would contribute to Chinese human capital enhancement. However, the quantity-quality tradeoff may be not the whole story, because another crucial factor relates to which segment of the population is reduced. China’s one-child policy is more strict in urban areas than in rural areas, where human capital investment in children is much lower; thus, it might induce a rural birth rate that is much higher than the urban one, which would have a negative effect on human capital. In our paper, we first define and stress the importance of the population structural change effect on human capital investment. We construct a theoretical model and discover the mathematical formula of the population structural change effect and quantity-quality tradeoff effect together, which are similar to the income effect and substitution effect in microeconomic theory. Then we empirically prove that China’s one-child policy induced a much higher rural birth rate, implying a negative population structural change effect that might offset the potentially positive quantity-quality tradeoff effect on human capital. Finally, we further investigate the relative sizes of the two effects and find it is very likely that China’s one-child policy reduced the human capital level of the new generation.

Does China's Birth Control Policy Really Induce More Human Capital Investment? A New Perspective Based on Population Structural Change Effect

This paper reexamines the issue of whether China's birth control policy induces more human capital investments per child. Rosenzweig and Zhang(2009) found there was significant tradeoff between number of children and child quality in China thus concluded that the contribution of China’s one-child policy to the development of its human capital was modest at best. However, quantity-quality tradeoff effect may be not the whole story, while which part of population is reduced also matters. In practice the one-child policy is more strict in urban areas than in rural areas, thus it may induce that birth rate in backward rural areas where human capital investment in children is lower is far higher than urban areas. In our paper we first define and stress the importance of population structural change effect on human capital investment. We construct a theoretical model and find out the math form of population structural change effect and quantity-quality tradeoff effect together, which are similar to income effect and substitution effect in microeconomic theory. Finally we empirically prove that China's birth control policy induced that rural birth rate rural was far higher than urban, implicating a negative population structural change effect which may offset the potentially positive quantity-quality tradeoff effect on human capital. Thus China’s birth control policy may not induce more human capital investment of the country.