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Parental Investments and Intra-household Inequality in Child Human Capital: Evidence from a Lab-in-the-Field Experiment

Michele Giannola

Published 2022 in Unknown venue

ABSTRACT

Intra-household inequality explains up to 50 percent of the cross-sectional variation in child human capital in the developing world. I study the role played by parents’ educational investment to explain this inequality and its determinants. To mitigate the identification problem posed by observational data, I design a lab-in-the-field experiment with poor parents in India. I develop new theory-driven survey measures based on hypothetical scenarios that allow me to separately identify parental beliefs about the human capital production function and their preferences for inequality in children’s outcomes, as well as study the role of household resources. I find that parents are driven by efficiency considerations rather than inequality concerns over children’s final outcomes. Because they perceive investments and baseline ability to be complements in the production function, they invest more in higher-achieving children. Resources are important, as constrained parents select more unequal allocations. I then show that primitive parameters identified in the experiment are predictive of actual investment behaviour. The results indicate that families act as a reinforcing agent, magnifying ability-based educational inequalities between children. University of Naples Federico II, CSEF and the IFS, email: michele.giannola@unina.it. I am very grateful to Orazio Attanasio and Imran Rasul for their support at each stage of this project, and to Alison Andrew, Richard Audoly, Samuel Berlinski, Richard Blundell, Teodora Boneva, Anne Brockmeyer, Gabriella Conti, Janet Currie, Mimosa Distefano, Carlo Galli, Costas Meghir, Rohini Pande, Francesca Salvati, Michela Tincani, Marcos Vera-Hernandez, and many seminar participants at Bank of Italy, Bank of Spain, Stockholm University, University of Bristol, University of Naples Federico II, UC3M, UCL, the IFS and Yale for helpful comments and discussions. I would also like to thank Lina CardonaSosa for her invaluable help with the fieldwork. All errors are my own. The study has obtained ethical approval from the UCL Research Ethics Committee (IRB Approval Number 16727/001) and the registry trial can be found at https://www.socialscienceregistry.org/trials/5444.

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