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Income Risks, Gender, and Human Capital Investment in a Developing Country

  • Yasuyuki Sawada

    (Faculty of Economics, University of Tokyo)

This paper investigates the role of permanent and transitory incomes in educational investments using household panel data from Pakistan. The empirical results indicate that transient poverty is a serious obstacle to human capital investment. Our analysis also points out that schooling response to an income shock is consistently larger for daughters than sons and that there may exist resource competition among siblings. Human capital investment and intrahousehold schooling allocation decisions seem to be affected by a need for self-insurance devices under binding credit constraints. As a by-product, our empirical results are in favor of the investment model of education against the consumption model.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2003/2003cf198.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-198.

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Length: 40 pages
Date of creation: Feb 2003
Date of revision:
Handle: RePEc:tky:fseres:2003cf198
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  1. Fafchamps, Marcel, 1992. "Solidarity Networks in Preindustrial Societies: Rational Peasants with a Moral Economy," Economic Development and Cultural Change, University of Chicago Press, vol. 41(1), pages 147-74, October.
  2. Jacoby, Hanan G & Skoufias, Emmanuel, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Wiley Blackwell, vol. 64(3), pages 311-35, July.
  3. Parish, W.L. & Willis, R.J., 1992. "Daughters, Education, and Family Budgets: Taiwan Experiences," University of Chicago - Economics Research Center 92-8, Chicago - Economics Research Center.
  4. Fafchamps, Marcel & Pender, John, 1997. "Precautionary Saving, Credit Constraints, and Irreversible Investment: Theory and Evidence from Semiarid India," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(2), pages 180-94, April.
  5. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-114, Summer.
  6. Pender, John L., 1996. "Discount rates and credit markets: Theory and evidence from rural india," Journal of Development Economics, Elsevier, vol. 50(2), pages 257-296, August.
  7. Anjini Kochar, 2000. "Parental Benefits from Intergenerational Coresidence: Empirical Evidence from Rural Pakistan," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1184-1209, December.
  8. Masao Ogaki & Qiang Zhang, 1998. "Decreasing Relative Risk Aversion and Tests of Risk Sharing," Working Papers 98-02, Ohio State University, Department of Economics.
  9. Alderman, Harold, 1996. "Saving and economic shocks in rural Pakistan," Journal of Development Economics, Elsevier, vol. 51(2), pages 343-365, December.
  10. Carter, Michael R., 1988. "Equilibrium credit rationing of small farm agriculture," Journal of Development Economics, Elsevier, vol. 28(1), pages 83-103, February.
  11. Harold Alderman & Jere R. Behrman & David R. Ross & Richard Sabot, 1996. "Decomposing the Gender Gap in Cognitive Skills in a Poor Rural Economy," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 229-254.
  12. Marcel Fafchamps & Agnes R. Quisumbing, . "Human Capital, Productivity, and Labor Allocation in Rural Pakistan," Working Papers 97019, Stanford University, Department of Economics.
  13. Udry, Christopher, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 495-526, July.
  14. Foster, Andrew D & Rosenzweig, Mark R, 1996. "Technical Change and Human-Capital Returns and Investments: Evidence from the Green Revolution," American Economic Review, American Economic Association, vol. 86(4), pages 931-53, September.
  15. Alderman, Harold & Garcia, Marito, 1993. "Poverty, household food security, and nutrition in rural Pakistan:," Research reports 96, International Food Policy Research Institute (IFPRI).
  16. Stephen Zeldes, . "Optimal Consumption with Stochastic Income: Deviations from Certainty Equivalence," Rodney L. White Center for Financial Research Working Papers 20-86, Wharton School Rodney L. White Center for Financial Research.
  17. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  18. Rosenzweig, Mark R, 1988. "Risk, Implicit Contracts and the Family in Rural Areas of Low-income Countries," Economic Journal, Royal Economic Society, vol. 98(393), pages 1148-70, December.
  19. Townsend, R.M., 1991. "Risk and Insurance in Village India," University of Chicago - Economics Research Center 91-3, Chicago - Economics Research Center.
  20. Nancy Birdsall & David Ross & Richard Sabot, 1993. "Underinvestment in Education: How Much Growth has Pakistan Foregone?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(4), pages 453-499.
  21. Rosenzweig, Mark R & Stark, Oded, 1989. "Consumption Smoothing, Migration, and Marriage: Evidence from Rural India," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 905-26, August.
  22. Timothy Besley, 1995. "Nonmarket Institutions for Credit and Risk Sharing in Low-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 115-127, Summer.
  23. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December.
  24. Sawada, Yasayuki & Lokshin, Michael, 2001. "Household schooling decisions in rural Pakistan," Policy Research Working Paper Series 2541, The World Bank.
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