Can Future Uncertainty Keep Children Out of School?
Publikation: Working paper › Forskning
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Can Future Uncertainty Keep Children Out of School? / Lilleør, Helene Bie.
Centre for Advanced Micreconometrics, Department of Economics, University of Copenhagen, 2008.Publikation: Working paper › Forskning
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TY - UNPB
T1 - Can Future Uncertainty Keep Children Out of School?
AU - Lilleør, Helene Bie
N1 - JEL classification: J13, J24, O15
PY - 2008
Y1 - 2008
N2 - There is little doubt in the literature, that poverty and liquidity constraints can drive children out of school and into child labour in developing countries. But are there other important explanations for low primary school enrolment rates? The child labour and schooling literature often ignores that uncertainty about future returns results in a need for risk diversification, that children function as old-age security providers when there are no available pension systems, that the human capital investment decision of one child is likely to be influenced by that of his/her siblings, and that rural parents face a choice of investing in either specific or general human capital of their children. In this paper, I investigate the effects of future income uncertainty on the joint human capital investment decision of children in a household. I develop and calibrate a simple illustrative human capital portfolio model and show that existing levels of uncertainty can indeed result in less than full school enrolment within a household, even in a world of perfect credit markets. The paper thus offers an alternative explanation for why it might be optimal for rural parents not to send all of their children to school.
AB - There is little doubt in the literature, that poverty and liquidity constraints can drive children out of school and into child labour in developing countries. But are there other important explanations for low primary school enrolment rates? The child labour and schooling literature often ignores that uncertainty about future returns results in a need for risk diversification, that children function as old-age security providers when there are no available pension systems, that the human capital investment decision of one child is likely to be influenced by that of his/her siblings, and that rural parents face a choice of investing in either specific or general human capital of their children. In this paper, I investigate the effects of future income uncertainty on the joint human capital investment decision of children in a household. I develop and calibrate a simple illustrative human capital portfolio model and show that existing levels of uncertainty can indeed result in less than full school enrolment within a household, even in a world of perfect credit markets. The paper thus offers an alternative explanation for why it might be optimal for rural parents not to send all of their children to school.
KW - Faculty of Social Sciences
KW - schooling
KW - child labour
KW - specific human capital
KW - traditional education
KW - intergenerational transfers
KW - old-age security
KW - income source diversification
KW - liquidity constraints
M3 - Working paper
BT - Can Future Uncertainty Keep Children Out of School?
PB - Centre for Advanced Micreconometrics, Department of Economics, University of Copenhagen
ER -
ID: 5362488