Journal of Population Economics

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

Compensating for unequal parental investments in schooling

Original Paper

Abstract

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.

Keywords

Household model Parental investment Marriage market Transfers 

JEL Classification

D13 J12 J13 

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)

References

  1. Altonji JG, Fumio H, Kotlikoff LJ (1997) Parental altruism and inter vivos transfers: theory and evidence. J Polit Econ 105(6):1121–1166CrossRefGoogle Scholar
  2. Becker GS (1991) A treatise of the family, Enlargedth edn. Harvard University Press, CambridgeGoogle Scholar
  3. Behrman JR, Rosenzweig MR, Taubman P (1994) Endowments and the allocation of schooling in the family and in the marriage market: the twins experiment. J Polit Econ 102(6):1131–1174CrossRefGoogle Scholar
  4. Chiappori PA (1988) Rational household labor supply. Econometrica 56(1):63–90CrossRefGoogle Scholar
  5. Chiappori PA (1992) Collective labor supply and welfare. J Polit Econ 100(3):437–467CrossRefGoogle Scholar
  6. Dunn TA, Phillips JW (1997) The timing and division of parental transfers to children. Econ Lett 54(2):135–137CrossRefGoogle Scholar
  7. Fitzsimons E, Malde B (2014) Empirically probing the quantity and quality model. J Popul Econ 27(1):33–68CrossRefGoogle Scholar
  8. Goody J (1973) Bride price and dowry in Africa and Eurasia in bride wealth and dowry. In: Goody J, Tambiah SJ (eds) Bride wealth and dowry, Cambridge Papers in Social Anthropology. No. 7. Cambridge University Press, CambridgeGoogle Scholar
  9. Greene WH (2004) Fixed effects and the incidental parameters problem in the Tobit model. Econ Rev 23(2):125–148CrossRefGoogle Scholar
  10. Hochguertel S, Ohlsson H (2009) Compensatory inter vivos gifts. J Appl Econ 24(6):993–1023CrossRefGoogle Scholar
  11. Li H, Rosenzweig MR, Zhang J (2010) Altruism, favoritism, and guilt in the allocation of family resources: Sophie’s choice in Mao’s mass send down movement. J Polit Econ 118(1):1–38CrossRefGoogle Scholar
  12. Liu M, Xu Z, Tao R, Su X (2006) Study on the dynamics of farmer’s education fees burden before and after the rural tax reform. Working PaperGoogle Scholar
  13. Lundberg SJ, Pollak RA, Wales TJ (1997) Do husbands and wives pool their resources? Evidence from the United Kingdom child benefit. J Hum Resour 32(3):463–480CrossRefGoogle Scholar
  14. McGarry K, Robert FS (1997) Transfer behavior within the family: results from the asset and health dynamics study. J Gerontol Ser B Psychol Sci Soc Sci 52:S82CrossRefGoogle Scholar
  15. McGarry K, Schoeni RF (1995) Transfer behavior in the Health and Retirement Study: measurement and the redistribution within the family. J Hum Resour 30:S184–S226CrossRefGoogle Scholar
  16. Menchik PL (1980) Primogeniture: equal sharing and the US distribution of wealth. Q J Econ 94(2):299–316CrossRefGoogle Scholar
  17. Menchik PL (1988) Unequal estate division: Is it altruism, reverse bequests, or simply noise? In: Kessler D, Masson A (eds) Modeling the accumulation and distribution of wealth. Clarendon, OxfordGoogle Scholar
  18. Min H, Eades JS (1995) Brides, bachelors and brokers: the marriage market in rural Anhui in an era of economic reform. Mod Asian Stud 29(4):841–869CrossRefGoogle Scholar
  19. National Bureau of Statistics (2007) China statistical year book. China Statistics Press, BeijingGoogle Scholar
  20. Neyman J, Scott EL (1948) Consistent estimates based on partially consistent observations. Econometrica 16(1):1–32CrossRefGoogle Scholar
  21. Nordblom K, Ohlsson H (2011) Bequests, gifts, and education: links between intergenerational transfers. Empir Econ 40(2):343–358CrossRefGoogle Scholar
  22. Park C (2003) Are children repaying parental loans? Evidence from Malaysia using matched child-parent pairs. J Popul Econ 16(2):243–263CrossRefGoogle Scholar
  23. Plug E, Vijverberg W (2003) Schooling, family background, and adoption: is it nature or is it nurture? J Polit Econ 111(3):611–641CrossRefGoogle Scholar
  24. Qian N (2008) Missing women and the price of tea in China: the effect of sex-specific earnings on sex imbalance. Q J Econ 123(3):1251–1285CrossRefGoogle Scholar
  25. Siu HF (1993) Reconstituting dowry and bride price in South China. In: Davis D, Harrell S (eds) Chinese families in the Post-Mao era. University of California Press, BerkeleyGoogle Scholar
  26. Tomes N (1981) The family, inheritance, and the intergenerational transmission of inequality. J Polit Econ 89(5):928–958CrossRefGoogle Scholar
  27. Wei SJ, Zhang X (2011) The competitive saving motive: evidence from rising sex ratios and savings rates in China. J Polit Econ 119(3):511–564CrossRefGoogle Scholar
  28. Wilhelm MO (1996) Bequest behavior and the effect of heir’s earnings: testing the altruistic model of bequests. Am Econ Rev 86(4):874–892Google Scholar
  29. Wolff FC, Spilerman S, Attias-Donfut C (2007) Transfers from migrants to their children: evidence that altruism and cultural factors matter. Rev Income Wealth 53(4):619–644CrossRefGoogle Scholar
  30. Zhang W (2000) Dynamics of marriage in Chinese rural society in transition: a study of a Northern Chinese village. Popul Stud 54(1):57–69CrossRefGoogle Scholar
  31. Zhongguo Jinrong Nianjian (Almanac of China’s finance and banking). Various Years, China Finance Publishing House, BeijingGoogle Scholar

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

Personalised recommendations