Investing in Human Capital Production: Evidence from India
Education is widely seen as a crucial step toward economic development, democracy, and growth. Despite progress in increasing enrollment rates, high dropout rates for adolescents, inconsistent attendance, and low levels of learning still plague many developing countries. Using high-quality surveys and administrative data from a large developing country combined with variation from natural experiments, these three papers will investigate how families choose to invest in human capital for their children, and how market forces and government programs affect these choices. Understanding whether early life investments encourage more educational investments later on, whether higher low-skill rural wages increase dropouts, and whether rural schools produce gains in consumption later in life will help generate evidence so that governments can make informed choices about how best to encourage human capital investment, and ultimately, economic prosperity. The results of this research have implications for family and individual well-being, economic growth, and national competitiveness.
The research proposal is comprised of three papers. In the first, we will investigate the effect of the largest workfare program in the world, on school enrollment and test scores. Using the timing of the rollout across districts for identification, we will identify whether the income effects of the program outweigh the effect of increased demand for low-skilled labor, which may induce children to leave school in order to work. The second paper estimates the extent of dynamic complementarities in the human capital production function in rural areas using exogenous shocks to consumption early in life and to the costs of schooling in childhood. The model will include a potential return to human capital in the labor market for children, which could induce higher-ability children to drop out of school, even in the presence of dynamic complementarities. The third paper will estimate the returns to rural schools using three exogenous shocks to schooling: the Right to Education Act, the introduction of free school lunches, and district rainfall shocks around the time of primary school completion. We will measure returns not only to wages, as is standard, but also health outcomes, consumption, assets, and marriage and fertility outcomes. Together, these papers will contribute to the understanding of how households choose to invest in schooling for their children, and how valuable these investments are.
This project is supported by the National Science Foundation under grant number 1658852.
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- Author: Shane Greenstein