Daughters, Education, and Family Budgets Taiwan Experiences

Growth in the education of the labor force is one of the most important determinants of economic growth, and the distribution by sex is a key determinant of gender inequality. In this paper, we examine how parents choose to invest in sons' versus daughters' education and the consequences of these choices for women's life chances. We explore this issue with retrospective data on the life cycle and family behavior of Taiwanese individuals who came of age from the 1940s onward. Since the lives of these cohorts encompass one of the most rapid economic and demographic transitions in history, evidence from their experience is of particular value in sorting out alternative hypotheses. Broadly, while contradicting crude forms of East Asian models of patriarchal families, our findings support economics models of the family in which attempts by altruistic parents to finance optimal investments in their children's human capital are frustrated by credit constraints. We find that early-born children in large families do particularly poorly, especially if they are female and can, hence, marry early. In poor families and in older cohorts, older sisters help increase the education of younger siblings of both sexes. However, in more recent periods and among more affluent families there is less need for one child to sacrifice for another and the effects of family size and gender composition are markedly weaker. From international and historical comparisons, we conclude that patterns of behavior observed during Taiwan's economic development may apply broadly around the developed world.