Substitution Effects in Parental Investments
Loren Brandt, Aloysius Siow, Jackie Wang
Journal of Population Economics 28(2) (2013), 423-462. Winner of Kuznet's Price, 2015
The paper estimates how parents adjust bride-prices and land divisions to compensate their sons for differences in their schooling investments in rural China. The main estimate implies that when a son receives one yuan less in schooling investment than his brother, he will obtain 0.7 yuan more in observable marital and post-marital transfers as partial compensation. Controlling for unobserved household heterogeneity, planned consumption differences across sons, and a fuller accounting of lifetime transfers are quantitatively important. The empirical findings strongly support the unitary model as a model of resource allocation for sons in traditional agricultural families.
Text: See Discussion Paper No. 4431