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Income Risks, Gender, and Human Capital Investment in a Developing Country

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  • Yasuyuki Sawada

    (Faculty of Economics, University of Tokyo)

Abstract

This paper investigates the role of permanent and transitory incomes in educational investments using household panel data from Pakistan. The empirical results indicate that transient poverty is a serious obstacle to human capital investment. Our analysis also points out that schooling response to an income shock is consistently larger for daughters than sons and that there may exist resource competition among siblings. Human capital investment and intrahousehold schooling allocation decisions seem to be affected by a need for self-insurance devices under binding credit constraints. As a by-product, our empirical results are in favor of the investment model of education against the consumption model.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2003/2003cf198.pdf
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Bibliographic Info

Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-198.

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Length: 40 pages
Date of creation: Feb 2003
Date of revision:
Handle: RePEc:tky:fseres:2003cf198

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References

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  1. Marcel Fafchamps & Agnes R. Quisumbing, . "Human Capital, Productivity, and Labor Allocation in Rural Pakistan," Working Papers 97019, Stanford University, Department of Economics.
  2. Fafchamps, Marcel & Pender, John, 1997. "Precautionary Saving, Credit Constraints, and Irreversible Investment: Theory and Evidence from Semiarid India," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(2), pages 180-94, April.
  3. Zeldes, Stephen P, 1989. "Optimal Consumption with Stochastic Income: Deviations from Certainty Equivalence," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 275-98, May.
  4. Sawada, Yasayuki & Lokshin, Michael, 2001. "Household schooling decisions in rural Pakistan," Policy Research Working Paper Series 2541, The World Bank.
  5. Rosenzweig, Mark R & Stark, Oded, 1989. "Consumption Smoothing, Migration, and Marriage: Evidence from Rural India," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 905-26, August.
  6. Alderman, Harold, 1996. "Saving and economic shocks in rural Pakistan," Journal of Development Economics, Elsevier, vol. 51(2), pages 343-365, December.
  7. Parish, W.L. & Willis, R.J., 1992. "Daughters, Education, and Family Budgets: Taiwan Experiences," University of Chicago - Economics Research Center 92-8, Chicago - Economics Research Center.
  8. Udry, Christopher, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 495-526, July.
  9. Pender, John L., 1996. "Discount rates and credit markets: Theory and evidence from rural india," Journal of Development Economics, Elsevier, vol. 50(2), pages 257-296, August.
  10. Morduch, J., 1995. "Income Smoothing and Consumption Smoothing," Papers 512, Harvard - Institute for International Development.
  11. Nancy Birdsall & David Ross & Richard Sabot, 1993. "Underinvestment in Education: How Much Growth has Pakistan Foregone?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(4), pages 453-499.
  12. Townsend, R.M., 1991. "Risk and Insurance in Village India," University of Chicago - Economics Research Center 91-3, Chicago - Economics Research Center.
  13. Mark Rosenzweig & Andrew D. Foster, . "Technical Change and Human Capital Returns and Investments: Evidence from the Green Revolution," Home Pages _065, University of Pennsylvania.
  14. Alderman, Harold & Garcia, Marito, 1993. "Poverty, household food security, and nutrition in rural Pakistan:," Research reports 96, International Food Policy Research Institute (IFPRI).
  15. Anjini Kochar, 2000. "Parental Benefits from Intergenerational Coresidence: Empirical Evidence from Rural Pakistan," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1184-1209, December.
  16. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  17. Carter, Michael R., 1988. "Equilibrium credit rationing of small farm agriculture," Journal of Development Economics, Elsevier, vol. 28(1), pages 83-103, February.
  18. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December.
  19. Harold Alderman & Jere R. Behrman & David R. Ross & Richard Sabot, 1996. "Decomposing the Gender Gap in Cognitive Skills in a Poor Rural Economy," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 229-254.
  20. Timothy Besley, 1995. "Nonmarket Institutions for Credit and Risk Sharing in Low-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 115-127, Summer.
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Cited by:
  1. Michael Clemens, 2004. "The Long Walk to School: International Education Goals in Historical Perspective," Working Papers 37, Center for Global Development.

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