Parental Actions and Sibling Inequality
26 Pages Posted: 11 Apr 2000
Date Written: February 2000
This paper sets forth a simple model of resource allocation within the family. The model is based on two main assumptions: there are non-convexities in human capital investments and parents cannot borrow to finance their children's education. The model shows that poor and middle-income parents will often find it optimal to channel human capital investments into a few of their children, thus creating sizable inequalities among siblings. The predictions of the model are consistent with the available evidence for three Latin American countries.
JEL Classification: D10, D13, D62
Suggested Citation: Suggested Citation