Within-Families Inequalities in Human Capital Accumulation in India

Abstract

We investigate within-family inequalities in human capital accumulation in India. We consider both indicators of the child's current stock of human capital and of investment into their continued human capital accumulation, distinguishing between time investments and pecuniary investment into school quality. We develop a theoretical framework that demonstrates how credit constraints and opportunity cost of child time matter differently for time investments and pecuniary investments into human capital. We employ a within family model using sibship fixed effects, and find mostly negative birth order effects, i.e. earlier born children are better off. This is more in line with previous results from developed countries rather than from developing countries. However, for time investments, which are influenced by the opportunity cost of child time, birth order effects are more in line with what has previously been found in developing countries. Hence, we demonstrate that patterns of birth order effects differ by measure of human capital.