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Human Capital Investments and Family Size in Italy: IV Estimates Using Twin Births as an Instrument

Author

Listed:
  • Ponzo Michela

    (Department of Political and Social Sciences, University of Calabria, Rende, Italy)

  • Scoppa Vincenzo

    (Department of Economics, Statistics and Finance, University of Calabria, Rende, Italy)

Abstract

Human capital investments at an early age appear crucial for individual outcomes. Family size might affect these investments influencing parental time and economic resources invested in children’s education. This feature is related to the children quantity-quality trade-off proposed by Becker that has been investigated only for a few countries because of data limitations. We investigate this issue for Italy – even in the absence of Census data relating family of origin to children’s educational outcomes – using many waves of the Survey on Household Income and Wealth of the Bank of Italy and focusing on the educational attainments of 19–23 years old. We use twin births as an instrumental variable to identify exogenous variations in family size. In contrast with the results from other developed countries, we find a significant negative effect of family size on children’s education, probably related to the low quality of education in some regions of the country and to the poor public assistance of families with children. We show that these findings are robust to a number of checks. The effects appear stronger for women, Southern regions, low-income families and when spacing between births is limited, suggesting that both time and financial constraints are mechanisms at work. We also find strong birth order effects.

Suggested Citation

  • Ponzo Michela & Scoppa Vincenzo, 2024. "Human Capital Investments and Family Size in Italy: IV Estimates Using Twin Births as an Instrument," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 24(2), pages 425-461, April.
    • Handle: RePEc:bpj:bejeap:v:24:y:2024:i:2:p:425-461:n:4
    DOI: 10.1515/bejeap-2022-0461
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    More about this item

    Keywords

    educational outcomes; family size; quantity-quality children trade-off; twin births; instrumental variables;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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