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Alex Armand

University College London, United Kingdom

Author: Alex Armand

Abstract: This paper studies how the interaction between intra-household allocation of resources and parental beliefs about the returns to education influences human capital investment among poor households. For this purpose, I study a conditional cash transfer program in the Republic of Macedonia, aiming at improving secondary school enrollment among children in poor households. For identification I exploit the random allocation of payments either to mothers or household heads, together with a unique information on parental subjective expectations of returns to schooling. I show that targeting mothers leads to an increase in secondary school enrollment only for children whose parental returns are sufficiently high at the beginning of the program. This effect is associated with an increase in individual expenditure shares on education for this group. I find no differential impact for other inputs, such as monitoring of school attendance and time use. Overall, I show that the effect of channeling resources to mothers is strictly related to heterogeneity in parental perceived returns to schooling.

JEL Codes: D13, J12, J16, D8, I2, J16, O15

Keywords: intra-household; conditional cash transfers; expectations; returns to schooling; gender; cognitive biases.

Full Text:  “Who wears the trousers in the family? Intra-household resource control, subjective expectations and human capital”