Intra-Household Resource Allocation: Do Parents Reduce or Reinforce Child Cognitive Ability Gaps?

27 Pages Posted: 30 Aug 2010

See all articles by Paul Frijters

Paul Frijters

Queensland University of Technology - School of Economics and Finance

David W. Johnston

Monash University

Manisha Shah

UCLA Department of Public Policy; NBER

Michael A. Shields

University of Melbourne - Department of Economics; IZA Institute of Labor Economics

Abstract

Do parents invest more or less in their high ability children? We provide new evidence on this question by comparing observed ability differences and observed investment differences between siblings in the NLSY. To overcome endogeneity issues we use sibling differences in handedness as an instrument for cognitive ability differences, since handedness is a strong determinant of cognitive ability. We find that parents invest more in high ability children, with a one standard deviation increase in child cognitive ability increasing parental investments by approximately one-third of a standard deviation. Consequently, differences in child cognitive ability are enhanced by differential parental investments. This finding has important implications for education policy.

Keywords: children, cognitive ability, parental investment, handedness

JEL Classification: D13, J1

Suggested Citation

Frijters, Paul and Johnston, David W. and Shah, Manisha and Shields, Michael A., Intra-Household Resource Allocation: Do Parents Reduce or Reinforce Child Cognitive Ability Gaps?. IZA Discussion Paper No. 5153. Available at SSRN: https://ssrn.com/abstract=1667777

Paul Frijters (Contact Author)

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia
(07) 3864 9364 (Phone)
(07) 3864 1500 (Fax)

HOME PAGE: http://www.bus.qut.edu.au/paulfrijters/index.jsp

Manisha Shah

UCLA Department of Public Policy ( email )

Box 951656
Los Angeles, CA 90095-1656
United States

HOME PAGE: http://publicaffairs.ucla.edu/manisha-shah

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Michael A. Shields

University of Melbourne - Department of Economics ( email )

Victoria 3010, 3010
Australia
+61 3 8344 4656 (Phone)
+61 3 8344 6899 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
54
Abstract Views
571
rank
370,342
PlumX Metrics