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Intra-household Resource Allocation: Do Parents Reduce or Reinforce Child Cognitive Ability Gaps?

Author

Listed:
  • Frijters, Paul

    () (London School of Economics)

  • Johnston, David W.

    () (Monash University)

  • Shah, Manisha

    () (University of California, Los Angeles)

  • Shields, Michael A.

    () (Monash University)

Abstract

Do parents invest more or less in their high ability children? We provide new evidence on this question by comparing observed ability differences and observed investment differences between siblings in the NLSY. To overcome endogeneity issues we use sibling differences in handedness as an instrument for cognitive ability differences, since handedness is a strong determinant of cognitive ability. We find that parents invest more in high ability children, with a one standard deviation increase in child cognitive ability increasing parental investments by approximately one-third of a standard deviation. Consequently, differences in child cognitive ability are enhanced by differential parental investments. This finding has important implications for education policy.

Suggested Citation

  • Frijters, Paul & Johnston, David W. & Shah, Manisha & Shields, Michael A., 2010. "Intra-household Resource Allocation: Do Parents Reduce or Reinforce Child Cognitive Ability Gaps?," IZA Discussion Papers 5153, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5153
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    References listed on IDEAS

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    1. del Bono, Emilia & Ermisch, John F & Francesconi, Marco, 2008. "Intrafamily Resource Allocations: A Dynamic Model of Birth Weight," CEPR Discussion Papers 6970, C.E.P.R. Discussion Papers.
    2. Johnston, David W. & Shah, Manisha & Shields, Michael A., 2007. "Handedness, Time Use and Early Childhood Development," IZA Discussion Papers 2752, Institute for the Study of Labor (IZA).
    3. David Loughran & Ashlesha Datar & M. Kilburn, 2008. "The response of household parental investment to child endowments," Review of Economics of the Household, Springer, vol. 6(3), pages 223-242, September.
    4. Johnston, David W. & Nicholls, Michael E. R. & Shah, Manisha & Shields, Michael A., 2010. "Handedness, Health and Cognitive Development: Evidence from Children in the NLSY," IZA Discussion Papers 4774, Institute for the Study of Labor (IZA).
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    Cited by:

    1. Jorge GarcĂ­a Hombrados, 2017. "Cognitive Skills and Intra-Household Allocation of Schooling," Working Paper Series 1817, Department of Economics, University of Sussex.

    More about this item

    Keywords

    handedness; parental investment; cognitive ability; children;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J1 - Labor and Demographic Economics - - Demographic Economics

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