Shadow education, intra-household financial resource allocation, and educational achievements

Studying intra-household allocation of financial resources is challenging as direct parental monetary expenditures on individual children is difficult to isolate from aggregate household expenditures. Due to such limitations, previous studies tend to examine parental allocation of resources indirectly from household expenditures or through other non-monetary investments. This article studies intra-household allocation of parental monetary expenditures on private supplementary tutoring or shadow education. I show a birth order disadvantage for later-born children in shadow education expenditures, and find evidence of disadvantages for girls in every birth order. These patterns are attributed to the preference for elder sons, which is common in India, and I subsequently test several features which stem from this preference. The analysis also shows that intra-household disparity in shadow education expenditures accounts for a substantial part of the gender gaps in cognitive test scores. The inequality contributions from the disparities in shadow education expenditures in test scores decrease as one moves down the birth order.