A new paper published ONLINE FIRST freely accessible argues that, in the presence of idiosyncratic ability shocks after childbirth, irreversible fertility decisions distort the resource allocation between the quantity and quality of children.
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Under- and over-investment in education: the role of locked-in fertility
by Masao Nakagawa, Asuka Oura & Yoshiaki Sugimoto
Author Abstract: This research argues that, in the presence of idiosyncratic ability shocks after childbirth, irreversible fertility decisions distort the resource allocation between the quantity and quality of children. In underdeveloped environments, where family size is locked into large levels, education investment places a heavy financial burden on households, which deprives some competent children of learning opportunities. In contrast, in more developed environments, family size is locked into smaller levels, which facilitates education investment even for some children with low aptitude. A redistributive policy to mitigate the distortion is proposed for each stage.
Journal of Population Economics
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