Do Parents Compensate or Reinforce Child Ability Gaps? Evidence from Egypt Using Private Tutoring

There are natural differences in children’s initial endowments and cognitive abilities. How parents respond to these differences, have significant implications on the children’s future chances and prospects. In this paper, we assess whether parents in Egypt compensate for or reinforce the endowment differences among their children, using test scores as an observable proxy for initial endowments and participation in private tutoring as a measure of schooling investment. The paper makes use of a unique longitudinal dataset with information on schooling to provide evidence on the effect of children’s cognitive ability differentials on parental investment in the Egyptian context. We find that parents allocate equal financial resources to siblings regardless of the observed endowment differences, which support the neutrality hypothesis. Results also show that maternal education level, child’s age, and sex are significantly associated with a parental differential investment in siblings’ human capital, where families whose mothers are with higher education provide more support to the less endowed sibling. Results also show a robust higher tutoring investment in favor of female children. Parents are more likely to spend more on private tutoring for the younger sibling than the older sibling. There is also no statistically significant regional difference in the likelihood of investment in children schooling