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Intra- and inter-household externalities in children's schooling: evidence from rural residential neighbourhoods in Bangladesh

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  • Mohammad Niaz Asadullah

Abstract

This article tests for neighbourhood effects on children's schooling, using unique data on rural residential neighbourhoods from Bangladesh. We find that school completion of children is positively and significantly affected by the mean grade completion of other children in the neighbourhood. We then present three pieces of evidence that suggest that the social effect offers a valid explanation. Firstly, the evidence we find of inter-household externalities is not driven out by control for a host of neighbourood and household attributes. Secondly, the result remains robust to neighbourhood composition effects: it is unchanged as we purge our main sample of the households within the neighbourhood that are potentially linked in terms of their recent history of partition. Thirdly, a similar peer effect is found for adults who completed schooling before the introduction of existing educational reforms in rural areas suggesting that the observed effect of growing up in educated neighbourhood does not merely capture the influence of common exposure to various government educational interventions. As a by-product, the article also provides evidence of intra-household externality in children's schooling, net of neighbourood externalities. We conclude by discussing the implication of these findings for education policy design.

Suggested Citation

  • Mohammad Niaz Asadullah, 2011. "Intra- and inter-household externalities in children's schooling: evidence from rural residential neighbourhoods in Bangladesh," Applied Economics, Taylor & Francis Journals, vol. 43(14), pages 1749-1767.
  • Handle: RePEc:taf:applec:v:43:y:2011:i:14:p:1749-1767
    DOI: 10.1080/00036840802600590
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    References listed on IDEAS

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    1. Mohammad Niaz Asadullah, 2008. "Sense in sociability? Maternal education, social capital and child schooling in rural Bangladesh," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(3), pages 482-496.
    2. Andrew D. Foster & Mark R. Rosenzweig, 2002. "Household Division and Rural Economic Growth," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 839-869.
    3. Basu, Kaushik & Foster, James E, 1998. "On Measuring Literacy," Economic Journal, Royal Economic Society, vol. 108(451), pages 1733-1749, November.
    4. Quentin Wodon, 2000. "Microdeterminants of consumption, poverty, growth, and inequality in Bangladesh," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1337-1352.
    5. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    6. M. N. Asadullah & S. Rahman, 2009. "Farm productivity and efficiency in rural Bangladesh: the role of education revisited," Applied Economics, Taylor & Francis Journals, vol. 41(1), pages 17-33.
    7. Niaz Asadullah, Mohammad & Chaudhury, Nazmul & Dar, Amit, 2007. "Student achievement conditioned upon school selection: Religious and secular secondary school quality in Bangladesh," Economics of Education Review, Elsevier, vol. 26(6), pages 648-659, December.
    8. Mohammad Niaz Asadullah, 2006. "Returns to Education in Bangladesh," Education Economics, Taylor & Francis Journals, vol. 14(4), pages 453-468.
    9. M. Niaz Asadullah, 2005. "The effect of class size on student achievement: evidence from Bangladesh," Applied Economics Letters, Taylor & Francis Journals, vol. 12(4), pages 217-221.
    10. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
    11. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 531-542.
    12. Basu, Kaushik & Narayan, Ambar & Ravallion, Martin, 2001. "Is literacy shared within households? Theory and evidence for Bangladesh," Labour Economics, Elsevier, vol. 8(6), pages 649-665, December.
    13. Donna Ginther & Robert Haveman & Barbara Wolfe, 2000. "Neighborhood Attributes as Determinants of Children's Outcomes: How Robust Are the Relationships?," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 603-642.
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    Cited by:

    1. Gulati, Namrata & Ray, Tridip, 2016. "Inequality, neighbourhoods and welfare of the poor," Journal of Development Economics, Elsevier, vol. 122(C), pages 214-228.

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