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Parental Preference, Heterogeneity, and Human Capital Inequality

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  • Ayalew, Tekabe

Abstract

In this article, I provide an empirical account of the human capital investment behavior of parents in the face of endowment differences among siblings. The data set used contains a three-wave panel of 4,030 individuals. The article presents a rare case in which endowments are measured explicitly. Health endowments are estimated from dynamic health production functions, while educational endowments are obtained from test scores. The simple score of the standard Raven's Colored Progressive Matrix (CPM) test is used to measure educational endowments. I use estimation procedures that combine an instrumental variables method with panel data estimators to control for endogeneity and heterogeneity. The results suggest that parents compensate for initial differences in health but reinforce initial educational differences among siblings. Hence, an educational subsidy aimed at reducing inequality may end up reinforcing the inequality that might exist in the absence of such subsidy. When parents invest more educational human capital in the able children, an educational subsidy aimed at reducing inequality may end up reinforcing the inequality that might exist in the absence of such subsidy. The same cannot be said about health.

Suggested Citation

  • Ayalew, Tekabe, 2005. "Parental Preference, Heterogeneity, and Human Capital Inequality," Economic Development and Cultural Change, University of Chicago Press, vol. 53(2), pages 381-407, January.
  • Handle: RePEc:ucp:ecdecc:y:2005:v:53:i:2:p:381-407
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    File URL: http://dx.doi.org/10.1086/425377
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    1. Stefan Dercon & Pramila Krishnan, 2000. "In Sickness and in Health: Risk Sharing within Households in Rural Ethiopia," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 688-727, August.
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    1. repec:eee:socmed:v:182:y:2017:i:c:p:89-96 is not listed on IDEAS
    2. Steckel, Richard H., 2009. "Heights and human welfare: Recent developments and new directions," Explorations in Economic History, Elsevier, vol. 46(1), pages 1-23, January.
    3. Ashlesha Datar & M. Rebecca Kilburn & David S Loughran, 2006. "Health Endowments and Parental Investments in Infancy and Early Childhood," Working Papers WR-367, RAND Corporation.
    4. Ashlesha Datar & Arkadipta Ghosh & Neeraj Sood, 2007. "Mortality Risks, Health Endowments, and Parental Investments in Infancy: Evidence from Rural India," NBER Working Papers 13649, National Bureau of Economic Research, Inc.
    5. Ashlesha Datar & M. Rebecca Kilburn & David S Loughran, 2006. "Health Endowments and Parental Investments in Infancy and Early Childhood," Working Papers 367, RAND Corporation.
    6. Giménez-Nadal, J. Ignacio & Molina, Jose Alberto & Ortega, Raquel, 2015. "As my parents at home? Gender differences in childrens’ housework between Germany and Spain," MPRA Paper 62699, University Library of Munich, Germany.
    7. repec:eee:socmed:v:194:y:2017:i:c:p:76-86 is not listed on IDEAS
    8. repec:eee:wdevel:v:99:y:2017:i:c:p:350-376 is not listed on IDEAS
    9. Dendir, Seife, 2013. "Children's Endowment, Schooling, and Work in Ethiopia," WIDER Working Paper Series 086, World Institute for Development Economic Research (UNU-WIDER).
    10. Arlette Simo-Fotso, 2016. "Child Disability and Siblings’ Healthcare Expenditures in a Context of Child Fostering," Working Papers 224, Institut National d'Études Démographiques (INED).
    11. Brandon J. Restrepo, 2016. "Parental investment responses to a low birth weight outcome: who compensates and who reinforces?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(4), pages 969-989, October.
    12. Gimenez-Nadal, J. Ignacio & Molina, José Alberto & Zhu, Yu, 2014. "Intergenerational Mobility of Housework Time in the United Kingdom," IZA Discussion Papers 8674, Institute for the Study of Labor (IZA).
    13. J. Gimenez-Nadal & Jose Molina, 2013. "Parents’ education as a determinant of educational childcare time," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 719-749, April.
    14. Dendir, Seife, 2014. "Children's cognitive ability, schooling and work: Evidence from Ethiopia," International Journal of Educational Development, Elsevier, vol. 38(C), pages 22-36.

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