Altruism Liquidity Constraint And Education Investment Education Essay

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Behrman et al. (1997) ¬nds in their study that children of rural Pakistanis whose fathers have completed junior secondary school score 31% higher score in reading test and 29% higher on mathematics test than children whose fathers have not. The same findings have been made by Case and Deaton (1999) for blacks in South African high school students. The education of the head of the family influences literacy of other members of the family especially children.

(Glewwe and Jacoby, 1994) ¬nds a strong correlation between mother's education and mathematics and reading test scores using data from Ghana. Father's education does not also strongly influence child learning, according to this study. It suggests that human capital investments may depend on the gender of the parent and child. There is another study whose finding is consistent with this study is from Malaysia by (Lillard and Willis, 1994) and (Thomas, 1994) from Brazil, Ghana and US.

(Philip H Brown, 2006) Explanation given for the relationship between parental investments on child's education is that more educated parents make greater investments in children's human capital.

(Strauss and Thomas, 1995) concluded the same that by providing higher levels of goods and services that complements learning and by devoting more time to their children. However, educated parents who do not have a good income may have to substitute time with providing goods to their children. The parents who are more educated may have a job which pays higher and have higher opportunity cost of time spent outside the workplace so they might also consider providing goods rather than their time.

Alternatively, parental education may increase the efficiency or effectiveness of the time spent interacting with children, and more educated parents may thus forgo some time spent working in order to make greater time investments in their children's human capital. However, if the returns to education are higher for the children of more educated parents or if parental education positively in¬‚uences parental preferences for children's education, then more educated parents may make greater investments in both goods and time, even in poor households. Unfortunately, in the absence of very restrictive assumptions about the functional form of the human capital production function and about the degree of substitutability of goods and time in human capital production, theory has little to say about the effect of parental education on investments in children's human capital.

(Sathar and Lloyd, 1994) investigate the impact of parental education on educational expenditures of children using survey data from Pakistan. The study concluded that the sspending on children's education is 75% higher if mothers have attended schools as compared to houses where mothers haven't had any type of formal education.

(Behrman et al. 1999), in his study using data from India gave the result that literate mothers spend more time with their children and educated parents may make greater investments in terms of goods and time on their children.

(Philip H. Brown, 2006)Using a survey of children and their families, teachers, and school and village leaders in 100 rural villages in Gansu province of China examines the effect of parental education on educational investments in children. He focused on both time and goods. The data used is of much more detail in this survey. It includes investments made on the reading material of children, number of hours spent with the child each week for homework, discussion of child's progress with teachers. It is found in the study that more educated parents allocate higher levels of both goods and time to their children's human capital production, even controlling for wealth, teacher quality, village ¬xed effects, and child's cognitive development.

On the other hand, parents also expect higher returns to the investments made by them on their child's education. Moreover, impact of education of mother and father differs with a marginal year with mother's education having more impact on time investment than a marginal year of father's education.

(Lareau, 2003) reported that socio-economic classes of parents effect their investment decision related to their child's cognitive and noon cognitive development. These perceptions of parents leads to different and disparate educational investments that result in different life experiences and also sometimes in producing educational inequalities and playing a key role in the reproduction of social class.

(Bourdieu and Passeron, 1977), preparing children for life as members of the social class or socioeconomic strata into which they are born. The typology of rigorous development and execution of natural development is a result of three dimensions of parental investments. First was found by Lareau (2003) in which parents of different social classes show different levels of interest and energy in activities of children outside school with children who are advantaged lead highly structured lives. Second, they also interacted differently with professionals like educators and physicians, with higher-class parents more comfortable and, consequently, more likely to seek out interactions with professionals for their children's benefit. It is not surprising that the advantaged concerted-cultivating parents were more comfortable with their children's teachers and more involved with their children's schools and details of schooling than were the lower-class parents. Third, the parents spoke differently to their children, where lower class parents used restricted codes of speech and commanded their children, higher class parents negotiated with reason.

Lareau's (2003) observations are globally consistent with preceding quantitative research that concluded that privileged children are more involved in extracurricular activities (e.g., Dumais 2002), and their parents are more involved with their schools (Sui-Chu and Willms 1996), and that socioeconomic indictors like family income and maternal education function through the home environment (Brooks-Gunn, Klebanov, and Duncan 1996; Guo and Harris 2000; Mayer 1997; J. R. Smith et al. 1997). indicator of socioeconomic status are related with parenting styles which have effects on achievements through skills that are developed through home schooling and activities that are conducted at home (DeGarmo, Forgatch, and Martinez 1999). Furthermore, parents with higher income and socio-economic status engage in more conversations and give more time to their children in activities of reading with them and provide more teaching experiences (e.g., Bradley et al. 2001). Their conversations are richer, contain more contingent responsiveness, and include more efforts to elicit children's speech, and their teaching styles include more scaffolding and complex verbal strategies (Bradley and Corwyn 2002; Hart and Risley 1995; Heath 1983; Sénéchal and LeFevre 2002; K. E. Smith, Landry, and Swank 2000).

(Chin and Phillips, 2004) suggested that parents of different socioeconomic backgrounds adhere to same patterns of parenting strategies and lower levels of investments on education result from less resources instead of socioeconomically graded conceptions of how childhood should be constructed. Furthermore, their results indicated that parental investments depend on gradational and heterogeneous distribution than Lareau's (2003) dichotomous typology.

Chin and Phillips's (2004) findings indicate that to the extent to which different levels of parental educational investments result from resources, rather than social components, concerted cultivation should mediate the economic and occupational components of socioeconomic background.

(Glauber and Conley, 2006) The findings that have emerged in the previous decades through research is that children that have large families do not have the same opportunities of education as much as the children that have smaller families.(see for example, Featherman and Hauser 1978; Blake 1981, 1989; Heer 1985; Powell and Steelman 1993). But recently researchers have tried to find if this is really a causal effect of family size on the well being of children.

The research by (Glauber and Conley, 2006) suggests that parents who have two same sex children, either girls or boys, are more likely to have a third child. Using an instrumental variable approach, data from the Census 5 percent is analyzed in this study from a Public Use Microdata Sample (PUMS) and two main findings are reported. One of those two findings is that increased sibship size reduces second-born boys' likelihood of private school attendance by six percentage points and increases second-born boys' likelihood of being held back a grade in school by almost one percentage point.

(Featherman and Hause ,1978) find that each additional sibling costs about a fifth of a year of schooling.

(Becker and Lewis, 1973) and (Becker and Tomes, 1976) propose that additional children

pulls the fiscal and non-fiscal resources of families and parents have to choose between quantity and quality of the investments on their children's development due to financial constraints.

Others have also suggested that the negative relationship between number of children and education of children is due to the selection process that parents have to go through and the choices they have to make. (Grotevant, Scarr, Weinberg 1977) Parents with lower cognitive abilities may choose to have larger families than parents with higher cognitive abilities. (Guo and VanWey, 1999) find that the effect of sibship size on children's education is not significantly different from zero. However, sibling fixed effects models do not effectively deal with endogeneity bias that results from parents adjusting their fertility patterns in response to the quality of their earlier children or that results from unobservable variables that may vary over time and across siblings.

Few recent studies have attempted to isolate the exogenous effect of sibship size on educational attainment using twin births. (Caceres-Delpiano, 2006) finds that increased size of children or sibship does not have a negative effect on US children's educational accomplishments and on the likelihood of privateschool attendance.

(Black and co-authors, 2005) find that increased sibship size has only a negligible effect on Norwegian children's educational attainment once birth order is controlled for.

(Guo and VanWey, 1999) report zero estimates of the effect of family size on children's

educational outcomes for White, Black, and Hispanic racial groups, but according to (Gobley and clauner, 2006) there study might be downwardly biased.

(Massey and Denton 1993) say that as family size increases for whites, parents may have to choose from two options (a) to move to a larger home in a district where school is well funded or to stay in the same home and pay for private schooling.

(Conley and Glauber, 2006) concludes on the basis o evidences found in their research that there is a negative effect on second born boys' educational outcomes by increased sibship size. The second outcome of this research by Conley and Gaubler is that there is no effect on first born boys' education.

Altruism, Liquidity Constraint, and Education Investment

(Toshihiro Ihori et al) The household expenditures on education of a child have sharply increased in East Asian societies. The investment in education can be higher or lower than the parent's first best, depending on the income level of the family. The study also says that due to the increase in cost of educating a child, fertility rates have fallen and the societies have aging population. The cost of educating a child increased in Japan till 1990s and then it stabilized, however, number of children per household has decreased since then and cost of educating per child has kept on increasing. This phenomenon prevails in other East Asian societies as well (Bray and Kwok, 2003).

(Arai ,2001) the average internal rate of return to university education is 5.93-6.42%

for women and 4.81-5.36% for men which is based on Japanese cross-sectional data from 1986 to 1995,

Cabinet Office, Government of Japan (2005) estimates that the rate of return from university

education for men born in 1975 is 5.7%.

(Psacharopoulos and Patrinos ,2004), who reviewed the empirical results for a wide variety of countries gave the conclusion that rate of return to another year of schooling is 10% on world average and it is lower than the average for the high-income countries of the OECD.

According to the cross-country analysis by (Trostel et al. 2002) According to their analysis, the rate of return to schooling is less than 4% for several countries for e.g Canada, Sweden, Netherlands, Norway and Germany (west) From these contradicting results, it is difficult to conclude the rate of return to investment in education.

(Cremer and Pestieau, 2006) argues thatmotivation behind parental involvement in child's education because of the joy of giving.

Who has the power to make the decision of how much to invest in education is a modeling issue. In the literature, while Balestrino (1997), De Fraja (2002), Anderberg and Balestrino (2003), and Cremer and Pestieau (2006) suppose that the parents do, Barham et al. (1995) and Boldrin and Montes (2005) suppose that the children do. In the model used by Ihori et al. the children make their own choice but the parents can influence it through their decisions on the share of the cost. It shows that it is a result of interaction between parents and child. The children's wage income is also determined by their education investment and parents keep into consideration the return on the investment they are making in terms of the wage the child will earn.