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Parental preferences, production technologies, and provision for progeny

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  • Ye, Maoliang
  • Yi, Junjian

Abstract

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.

Suggested Citation

  • Ye, Maoliang & Yi, Junjian, 2017. "Parental preferences, production technologies, and provision for progeny," Journal of Comparative Economics, Elsevier, vol. 45(2), pages 261-270.
  • Handle: RePEc:eee:jcecon:v:45:y:2017:i:2:p:261-270
    DOI: 10.1016/j.jce.2016.09.003
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    More about this item

    Keywords

    Intrahousehold human capital investments; Reinforce; Compensate; Parental preferences; Production technology;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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