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Parental Beliefs About Returns to Educational Investments - The Later the Better?

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  • Boneva, Teodora
  • Rauh, Christopher

Abstract

In this paper, we study parental beliefs about the technology which maps parental investments into future child outcomes. We document that parents perceive late investments as more productive than early investments, and that they perceive investments in different time periods as substitutes. These beliefs contrast with findings in the empirical literature which suggest that early investments are more productive and are complementary to late investments. We show that parental beliefs about the returns to investments vary substantially across the population and that individual beliefs are predictive of actual investment decisions. Moreover, we document that parental beliefs about the productivity of investments differ significantly across socio-economic groups. Perceived returns to parental investments are positively related to household income, thereby potentially contributing to intergenerational earnings persistence.

Suggested Citation

  • Boneva, Teodora & Rauh, Christopher, 2016. "Parental Beliefs About Returns to Educational Investments - The Later the Better?," VfS Annual Conference 2016 (Augsburg): Demographic Change 145610, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc16:145610
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    More about this item

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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