Children's schooling in Nicaragua: What is the link between educational achievement,borrowing, and gender?

The impact of credit has been widely studied, and yet little is known about the effect of formal versus informal loans. In this paper, we contrast the two and their impact on children's schooling using longitudinal data from Nicaragua. To address endogeneity, we utilize both household fixed effects and locality–year fixed effects. Our results indicate that, on average, children from borrowing households fare worse than children from nonborrowing households, with male borrowers having a disproportionately negative effect on boys, and vice versa for girls and female borrowers. Informal credit is found to have a protective effect on school attendance, but the effects of formal and informal credit on cumulative schooling are found to be statistically equivalent. However, this appears to mask considerable heterogeneity within informal borrowing.     

Intergenerational transfer,human capital and long-term growth in China under the one child policy

We suggest that the demographic changes caused by the one child policy (OCP) may not harm China's long-term growth. This is because of the higher human capital accumulation induced by the intergenerational transfer arrangements under China's poor-functioning formal social security system. Parents raise their children and depend on them for support when they reach an advanced age. A decrease in the number of children prompted by the OCP results in parents investing more in their children's education to ensure retirement consumption. In addition, decreased childcare costs strengthen educational investment through an income effect. Using a calibrated model, a benchmark with the OCP is compared to three counterfactual experiments without the OCP. Output in 2025 without OCP decreases about 4% under moderate estimates. The output gain comes from a greatly increased educational investment driven by fewer children (11.4 years of schooling rather than 8.1). Our model sheds new light on the prospects of China's long-term growth by emphasizing the OCP's growth enhancing role through human capital formation under intergenerational transfer arrangements.     

The causal effects of parents’ schooling on children's schooling in urban China

Parental schooling is widely thought to improve child outcomes. But most studies on parental-child relations are associative, without control for estimation problems, such as unobserved intergenerationally-correlated endowments, if causality is of interest. The few exceptions are relatively recent studies that focus on high-income countries (HICs), with their much different contexts than the low- and middle-income countries (LMICs) in which the vast majority of children globally are growing up. This paper estimates the causal (conditional on the assumptions for the model) relationships between parents’ schooling and their children's schooling in the most populous LMIC, using adult identical (monozygotic, MZ) twins data from urban China. Our ordinary least-squares estimates show that one-year increases in maternal and paternal schooling are associated, respectively, with 0.4 and 0.5 more years of children's schooling. However, if we control for genetic and other endowment effects by using within-MZ fixed effects, the results indicate that mothers''and fathers’ schooling have no significant effects on children's schooling. Our main results remain with various robustness checks, including controlling for measurement error. These results suggest that the positive associations between children's and parents’ schooling in standard cross-sectional estimates in this major LMIC are mainly due to the correlation between parents’ unobserved endowments and their schooling and not the effects of their schooling per se.     

Compulsory Schooling Laws and the Cure for Child Labour

This paper provides an explanation for the existence of child labour which relies on the imperfect enforcement of compulsory schooling laws. In the presence of complementarities in the production of human capital that justify legislative intervention, mandatory measures ensure that coordination failures are solved so that all parents send their children to school and the socially optimal equilibrium is reached. However, if enforcement of legislation is too low, multiple equilibria emerge. In this case, compulsory schooling laws may have adverse welfare effects on all households.     

Child fostering in Africa: When labor and schooling motives may coexist

The paper proposes a theoretical framework for understanding purposive child fostering in Africa, whereby a non-orphaned child is sent to live temporarily with relatives. In the model, adults decide whether to foster in or out a child in conjunction with other household choices, e.g. own time allocation between market and non-market activities, children's amount of work, and schooling. By allowing for positive externalities from fostering, and thus asymmetric motives for fostering in (labor) and out (human capital), the proposed framework predicts that school-age children are sent to better-off households and that some families may foster in and out simultaneously. The model identifies the conditions under which all actors involved, children included, may benefit from fostering arrangements, but also points to situations where fostering may become an opportunity to marginalize a subset of children. The paper aims to provide a sound theoretical foundation that sheds light on why there exists mixed empirical evidence on the effects of fostering on children's well being, and cautions against demonizing non-parent residence as unequivocally detrimental to children.     

Information and credit access: using bankruptcy as a signal

Legally, a bankruptcy flag can appear on an individual's credit report for up to 10 years after the filing. The flag affects an individual's credit score, and in turn, an individual's access to credit. In this article, we investigate how the bankruptcy flag affects access to credit along three dimensions–loan acceptance, the price of the loan as is determined by the interest rate, and the amount of credit the household receives. Using the Panel Study of Income Dynamics and the Survey of Consumer Finances, we estimate a series of two-stage models corrected for sample selection and adjusted to account for the household's level of creditworthiness. We find that the bankruptcy flag increases the probability of being denied access to a loan. The flag also increases interest rates for unsecured loans and lowers the credit limits available to households. The findings have important implications with respect to current bankruptcy code and the impact that information, such as the bankruptcy flag, can have on the efficiency of the credit markets.     

No country for young men: International migration and left‐behind children in Tajikistan

This paper investigates the effects of international migration on the schooling and labour outcomes of left‐behind children in rural Tajikistan. Using three‐wave panel survey data, I rely on an instrumental variable strategy to address the non‐random selection into migration. I identify important and gender‐differenced schooling and labour supply responses. My findings suggest that boys living in migrant households are less likely to lag behind at school or work. At the intensive margin, they also report fewer hours of work per week. On the other hand, left‐behind teenage females undertake a higher number of domestic chores. They appear to marry earlier as well. The migration impact on boys appears to be driven by remittances and the improved financial situation of households. The absence of any positive influence on the education of left‐behind girls is likely to be explained by Tajikistan's cultural norms and institutions.     

Impact of AIDS on Family Composition,Welfare, and Investment: Evidence from Uganda*

Although availability of quantitative information on the extent of HIV/AIDS in Africa is improving, the socio‐economic implications of the epidemic remain poorly understood. This paper explores this issue for Uganda focusing on households who received foster children between 1992 and 2000, a phenomenon that affected more than 15% of households. The authors find that addition of a foster child resulted in significant reductions of per capita consumption, income, and household investment which were more pronounced for the poor. Initial disadvantages in foster children's access to education for this group were overcome in the course of UPE implementation, while new inequalities have emerged in access to health services. Foster children's ability to access services will thus be affected by the broader policy environment as well as programs more specifically targeted at this group.     

Child labor and schooling response to changes in coca production in rural Peru

Coca eradication and interdiction are the most common policies aimed at reducing the production and distribution of cocaine in the Andes, but little is know about their impact on households. This paper uses the shift in the production of coca leaves from Peru to Colombia in 1995 to analyze the indirect effects of the anti-coca policy on children's allocation of time. After different sensitivity checks, the results indicate that a decrease in coca production is associated with increases in work and hours children living in coca-growing states devote to work within and outside the household, with no effects on schooling outcomes. These findings suggest a previously undocumented indirect effect of drug policies on household behavior.     

Children as Economic Agents

A generational perspective recognizes that children have preferences which may differ systematically from those of adults, and, furthermore, that a children's standpoint should be recognized by scholars and activists and incorporated into policy targeted at children and their families. Economics has not considered children as agents because of their lack of power relative to adults. The implications of recognizing children's agency are explored for the case of children's paid and unpaid labor force and household work.     

Bank lending procyclicality and credit quality during financial crises

This paper analyses macroeconomic and financial determinants of bad loans applying a SVAR approach to investigate whether excessive loans granted during expansionary phases can explain the more than proportional increase in non-performing loans during contractionary periods. The results indicate that the effects of a permanent shock to bad loans on the excess of credit are significant and persistent for bad loans to firms, but not for bad loans to households or in the case of Cooperative Credit Banks, who adopt more efficient lending policies.     

Intergenerational Transmission of Education and Mediating Channels: Evidence from a Compulsory Schooling Reform in Germany

In this paper, I estimate the causal effect that an additional year of schooling for parents has on their children's education, by exploiting a compulsory schooling reform that was implemented in all West German states between 1946 and 1969. Although previous research indicates that the reform had no effect on earnings, I find that an additional year of schooling for women strongly affects the education of their sons. There is no effect for the other parent–child gender pairs. I investigate numerous channels that might mediate the positive effect of the education of mothers. Most importantly, I find that individuals with more schooling value their children's educational success as more important.     

International factor mobility,informal interest rate and capital market imperfection: A general equilibrium analysis

This paper makes an attempt to provide a theory of determination of interest rate in the informal credit market in a less developed economy in terms of a three-sector static deterministic general equilibrium model. There are two informal sectors which obtain production loans from a monopolistic moneylender and employ labour from the informal labour market. On the other hand, the formal sector employs labour at an institutionally fixed wage rate and takes loans from the competitive formal credit market. We show that an inflow of foreign capital and/or an emigration of labour raises (lowers) the informal (formal) interest rate but lowers the competitive wage rate in the informal labour market when the informal manufacturing sector is more capital-intensive vis-à-vis the informal agricultural sector. International factor mobility, therefore, raises the degrees of distortions in both the factor markets in this case.     

EQUILIBRIUM LENDING MECHANISM AND AGGREGATE ACTIVITY*

We construct a model of the credit market where financial contracting is subject to costly state verification and moral hazard. The economy's aggregate activity and its equilibrium lending mechanism are determined jointly. We analyze how changes in the model's exogenous variables, including the returns of the economy's investment projects and the supply of loans, affect the economy's aggregate output and the types of the credit through which investment is funded.     

Do family resources matter? Educational attainment during transition in Poland*

We analyse the relationship between family background and children's educational attainment in the 1990s in Poland. If parental poverty affects children's educational prospects, the increase in social inequalities observed in the Polish transition process will be transmitted between generations. We apply an ordered probit model of educational attainment on longitudinal data from the Polish Labour Force Survey. Surprisingly, parents’ income and their labour market status have only a weak impact on children's education. Parents’ schooling, however, is strongly related to children's, and so are household structure, city size, and region of residence. We conclude that, if transmission of inequality takes place between generations, this seems to be primarily caused by the inheritance of human capital rather than by pure wealth effects.     

Child Schooling and Work Decisions in India: The Role of Household and Regional Gender Equity

Abstract

This paper tests three hypotheses about how mothers' autonomy in India affects their children's participation in school and the labor market. To do so it extends the concept of mothers' autonomy beyond the household to include the constraints imposed by the extent of gender equity in the regions in which these women live. This study began with the expectation that increased autonomy for Indian mothers living in heterosexual households would increase child schooling and decrease child work. However, the results are mixed, indicating that mother's autonomy can be reinforced or constrained by the environment. The paper concludes that mothers and fathers in India make different decisions for girls vis-à-vis boys and that the variables reflecting mothers' autonomy vary in their impact, so that mothers' level of education relative to fathers' is not often statistically significant, while mothers' increased contributions to household expenditure decrease the probability of schooling and girls' work.     

Understanding the relationship between poverty and children's health

Throughout the world, children from poor households have worse health than children from wealthier households. There are numerous channels through which such disparities may arise. For designing programs to improve children's health, it is important to identify, for example, whether these disparities arise from differences in pre-natal health inputs and behaviors (nutrition, alcohol and tobacco use during pregnancy), or differential health inputs following birth. We explore these issues for Russia, where children's health is particularly poor. We find that large health disparities between rich and poor originate largely from differences in pre-natal nutrition and alcohol use.     

Persistent inequality: An explanation based on limited parental altruism

This paper proposes an alternative theory for the observed persistence in income inequality across households, a theory based on limited parental altruism. We argue that the degree of parental altruism is ‘limited’ by the economic status of the parent. A poor parent not only has less ability, but also has less willingness to invest in children's human capital formation. This generates a non-linearity in such investment expenditures. As a result, initial income differences may perpetuate over time—even with convex technology and convex preferences. In this context, we also compare the efficacy of the public vis-à-vis the private education system from the perspective of long run growth.     

The impact of rural electrification on income and education: Evidence from Bhutan

We investigate the impact of a rural electrification program on household income and children's schooling in rural Bhutan. Using propensity score matching, we find that electrification had a statistically significant impact on nonfarm income and education. Nonfarm income increased by 61 percent and children gained 0.72 additional years of schooling and 9 minutes of study time per day. We do not observe significant effects on farm income. Results are consistent and robust to different matching algorithms. Our findings indicate that investments in reducing energy deficit may help improve human welfare in Bhutan.     

Patience among children

Recent policy initiatives offer cash payments to children (and often their families) to induce better health and educational choices. These policies implicitly assume that children are especially impatient (i.e., have high discount rates); however, little is known about the nature of children's patience, how it varies across children, and whether children can even make rational inter-temporal choices. This paper examines the inter-temporal choices of 5- to 16-year-old children in an artefactual field experiment. We examine their choices between varying levels of compensation received in 2 or 4 months in the future and in 0 or 2 months in the future. We find that children's choices are consistent with hyperbolic discounting, boys are less patient than girls, older children are more patient and that mathematical achievement test scores, private schooling and parent's patience are not correlated with children's patience. We also find that although more than 25% of children do not make rational inter-temporal choices within a single two-period time frame, we cannot find variables that explain this behavior other than age and standardized mathematical achievement test scores.