The impact of parental income on the intra-household distribution of school attainment: A measurement strategy and evidence

The relationship between parental income and the level of educational attainment of children is controversial. Some argue that a direct relationship exists and others that unobserved factors correlated with both income and attainment drive the relationship. This paper explores the relationship between income and the intra-household dispersion of education attainment among children. We employ data from Brazil, which like many developing countries displays greater variation in intra-household education attainment than most high-income countries. Unlike prior analyses, IV estimation is employed to control for endogeneity and other biases. Contrary to prior findings, we report a robust monotonically declining relationship between the intra-household dispersion of education attainment and instrumented income. This relationship is consistent with child specialization in poor households suggested by recent theoretical work and has important policy implications.