Abstract
This study estimates the trade-off between child quantity and quality by exploiting exogenous variation in fertility under son preferences. Under son preferences, both sibling size and fertility timing are determined depending on the first child’s gender, which is random as long as parents do not abort girls at their first childbearing. For the sample South Korean households, I find strong evidence of unobserved heterogeneity in preferences for child quantity and quality across households. The trade-off is not as strong as observed cross-sectional relationships would suggest. However, even after controlling for unobserved heterogeneity, a greater number of siblings have adverse effects on per-child investment in education, in particular, when fertility is high.
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Notes
Interestingly, Gomes (1984) found for a household sample from Kenya that children from a larger family are more likely to complete grades. The reason is that parents in Kenya control their eldest child’s earnings and younger children benefit from this extra source of family resources. This suggests that the relationship between child quantity and quality take different forms across different cultures. Cross-country comparative studies are demanded.
On the other hand, economists have also tried to develop theoretical explanations for the observed trade-off. The major novelty here is that, even without assuming unusual substitutability between child quantity and quality in preferences, the trade-off may exist due to their interaction due to budget constraints (Becker and Lewis 1973).
School supplies and reference books are likely to account for most of the rest of total expenses. In particular, most students study with some “unrequired” reference books that are quite expensive. Tuition and other school fees are relatively small. For example, in 2005, annual high-school tuition and fees were around US $1,500.
Why South Korean parents are strongly concerned about children’s education is an important question but beyond the scope of this paper. It might be because of strong intergenerational ties or increasing demand for skilled workers. Refer to Seth (2002) for a historical perspective on the origin of “education fever” in South Korea.
An earlier version of this paper proved these results and is available from the author upon request.
Investment in education might depend on the sex composition of children due to pure cost differences in education across girls and boys. After controlling for sibling size, Lundberg and Rose (2004) find no significant difference in educational costs by gender in the United States.
The number of observations for each case is interesting. For example, there are only six observations with three sons and no daughters, which implies that most households stop further childbearing when they have two sons. Also the number of households with two daughters only is disproportionately small, which suggests that households are likely to have another child when they have two daughters.
The returns to college education are even higher for women; the college wage premium, measured by the average wage gap between high-school and college graduates as a proportion of high-school graduates’ average wage, was 65% for women but only 44% for men in 1997. In addition, there is no gender gap in the employment rate for both high school and college graduates.
Kim and Lee (2002) found that parents invest slightly more in private tutoring for daughters. They interpret this finding as a result of the fact that girls are more likely to take private tutoring in music and arts, which tend to be more expensive. Their finding suggests that our estimates might be overestimated in absolute terms. To address this issue, we experimented with a different dependent variable, total investment in education except for private tutoring, which does not significantly change our results below.
Including the time-invariant random effect that is orthogonal to explanatory variables does not make any significant difference. Also, I ran a regression of educational investment directly on the first child’s sex (or overall sex composition) with other controls. Even though the estimates are potentially biased, if the sex mattered in a significant way, I should have found some direct effects of the first child’s sex (or sex composition). But I found no significant effect. Those variables are significant only if we lower the number of children.
The IV estimates in this study are interpreted as local average treatment effects (Imbens and Angrist 1994). That is, my results show the marginal effects of the number of siblings for those who would change their childbearing decisions depending upon the first child’s sex. The monotonicity assumption is likely to hold for the current study because defiers (those with “daughter preferences”) are rare.
For robustness, I also experimented with a different instrument—the occurrence of twinning at the first birth. The validity condition in this study seems questionable, as the costs of educating children would differ for two singletons and two twins. Having two children at the same time may decrease per-child investment, in particular, when the household faces borrowing constraints. The estimate turns out to be significantly negative.
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Acknowledgment
I would like to thank Daniel Hamermesh for his comments and guidance during this study. Also, I would like to thank the editor Junsen Zhang, anonymous referees, Steve Bronars, Robert Crosnoe, Gordon Dahl, Stephen Donald, Gerald Oettinger, Steve Trejo, and seminar participants at the University of Texas at Austin and at the 2003 annual meetings of the Society of Labor Economists.
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Lee, J. Sibling size and investment in children’s education: an asian instrument. J Popul Econ 21, 855–875 (2008). https://doi.org/10.1007/s00148-006-0124-5
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DOI: https://doi.org/10.1007/s00148-006-0124-5