Preliminary and Incomplete Draft Household Production and Parental Investment in Children

This paper studies parental allocation of schooling resources among children when family members engage in household production. It shows that the assignment of persons to managerial versus production tasks may result in a complementary effect: the education of the manager not only enhances allocative decisions but also filters through the team work to raise the productivity of other family workers. Under joint production, parents choose to concentrate schooling investment on the manager resulting in a less equal distribution of education among children and to have a larger family size, as compared with labor market participation. The paper shows that the model is consistent with observed family behaviors in developing countries and uses it to analyze gender education gap, birth-order effects, the relationship between household schooling and production efficiency, and the impact of technical change on educational inequality. Preliminary and Incomplete Draft Household Production and Parental Investment in Children Dennis Tao Yang and Xiaodong Zhu