Essays on Family Economics and Human Capital Development
Date
2019-06-21
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Abstract
This thesis consists of three essays on households' decisions regarding labor supply and education. In the first chapter, I investigate how family income affects children's education. While there is substantial evidence on the effect of parents' financial resources on children's education, the size and causal impact are subject to disagreement. I exploit a persistent negative shock in the family income to estimate the causal effect of parental resources on children's education. The United Nations Security Council sanctions imposed on Iran in 2006 caused a large and persistent reduction in households' income. Exploiting variation in the strength of sanctions across industries and using unique survey data with detailed information on children's education and living circumstance, I obtain two main findings. First, the negative income shock decreased children's total years of schooling by 0.2 years and the probability of attending college by 8.7%. This effect is larger for children at crucial ages and children from low income families. Second, households reduced expenditure on children's education by 61% - particularly on expenditure for school tuition. This finding indicates households respond to the reduction in income by substituting away from higher-quality private schools towards lower-quality public schools for their children. This negative effect on education expenditure is larger for children from middle income families. The sanctions impact on children's education is larger than implied by the income elasticity estimates from the previous literature likely because sanctions have persistent effects on parent income. Taken together the results imply that a persistent reduction in parents' income has large negative effects on education and permanent income of children. Investment in children's education has long lasting consequences on their future welfare including their labor market outcomes. In the second chapter, I examine the effects of education on the labor force participation (LFP) of married women in an intra-household collective decision framework, in which bargaining power is endogenous. In this case, individuals' pre-marriage choices including educational choices and matching on the marriage market, determine their bargaining power. Thus, education affects labor supply through two channels: bargaining power and wage. The estimated model exhibits the features that are consistent with the data. First, the female's bargaining power increases when a woman is more educated relative to her spouse. Second, women's LFP is an inverse U-shaped function of bargaining power. As a woman's bargaining power increases, she participates more in the labor market. However, over a certain level of bargaining power, women are less likely to work outside the home. Thus, this chapter identifies a new channel through which education can affect LFP. Using this model, I provide an explanation for the surprising negative relationship between women's education and their participation in the labor market in Iran. It is important to understand how people interactively make decisions regarding education and labor supply. While there is a rich body of literature examining the importance of education on labor market outcomes, the effects of labor market opportunities on education decisions have not yet been fully explored. In the last chapter, co-authored with Dr. Atsuko Tanaka, we investigate the causal effects of labor market opportunities on educational attainment. To do so, we exploit discontinuity generated by a 2010 policy in Iran that limited female employment in the public sector. We find that this hiring quota significantly worsened female labor market conditions and immediately reduced women's enrollment rates in four-year colleges: a 10 percentage point reduction of the public sector jobs decreased women's college attendance rates by 18 percentage point. We also find that the quota decreased the proportion of female students in college majors with strong ties to public employment and increased college majors with weaker associations to the public sector. Our main finding highlights the importance of labor market opportunities for women as a determinant of their educational attainment.
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Keywords
Human capital, Family economics
Citation
Moeeni, S. (2019). Essays on Family Economics and Human Capital Development (Doctoral thesis, University of Calgary, Calgary, Canada). Retrieved from https://prism.ucalgary.ca.