Journal of Population Economics

, Volume 28, Issue 2, pp 423–462 | Cite as

Compensating for unequal parental investments in schooling

  • Loren Brandt
  • Aloysius Siow
  • Hui Wang
Original Paper


This paper investigates how rural families in China use marital and post-marital transfers to compensate their sons for unequal schooling expenditures. Using a common behavioral framework, we derive two methods for estimating the relationship between parental transfers and schooling investments: the log-linear and multiplicative household fixed-effects regression models. Using data from a unique household-level survey, we strongly reject the log-linear specification. Results from the multiplicative model suggest that when a son receives 1 yuan less in schooling investment than his brother, he obtains 0.47 yuan more in transfers as partial compensation. Since our measure of transfers represents a substantial fraction of total parental transfers, sons with more schooling likely enjoy higher lifetime consumption. Redistribution within the household may be limited by either the parents’ desire for consumption equality or bargaining constraints imposed by their children. Controlling for unobserved household heterogeneity and a fuller accounting of lifetime transfers are quantitatively important.


Household model Parental investment Marriage market Transfers 

JEL Classification

D13 J12 J13 



We thank the seminar participants of the Australian National University, the CLSRN 2008 Annual Conference, the China Summer Institute 2008 Annual Conference, 2011 Asian Meeting of the Econometric Society, ESPE, LSE, Queens University, and the University of Toronto. Loren Brandt and Aloysius Siow thank SSHRC for financial support. Hui Wang thanks CLSRN, Humanities and Social Science Foundation from China Ministry of Education (project no. 13YJC790144), and Chinese Service Center for Scholarly Exchange (CSCSE) for financial support.

Supplementary material

148_2014_528_MOESM1_ESM.pdf (61 kb)
Figure A1 (PDF 61 kb)
148_2014_528_MOESM2_ESM.pdf (57 kb)
Table A1 (PDF 56 kb)


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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  1. 1.University of TorontoTorontoCanada
  2. 2.Department of Applied Economics, Guanghua School of ManagementPeking UniversityBeijingPeople’s Republic of China

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