Parental Preferences and Investments in Children's Human Capital

The human capital an individual possesses is, in large part, determined by the preferences of his/her parents. This dissertation examines the role of parental preferences along three dimensions. Chapter One examines whether preferences differ among ethnic groups. Chinese-Americans have been cited as a "model minority"---an group that has achieved higher than average success. But self-selection of immigrants also affected the composition of the Chinese-American population. Changes in immigration law are utilized to consider the contribution of parental preferences to the "model minority" stereotype. Although immigration restrictions created a highly selective group of Chinese-Americans, human capital is not highly correlated across generations, and there is little evidence of regression to the mean. These patterns suggest that Chinese-Americans do have stronger preferences for education. Chapter Two focuses on gender disparities and considers the importance of parental preferences relative to other constraints faced by the household. To quantify the determinants of gender discrimination---parental preferences, low income, demand for household labor---four household types are utilized, highlighting different levels of parental involvement and shocks to income. A fixed effects model is employed to control for unobserved characteristics that are correlated with household type. Results indicate that reducing the time available for household production reduces the probability that daughters enroll in school relative to their brothers, but daughters' education is less elastic for transitory income shocks. Increasing mothers' bargaining power has the largest impact on closing the gender gap. Chapter Three considers how parental preferences may be mediated by noncooperative behavior. Household decision-making cannot be coordinated when allocations are not transparent, e.g. when one spouse migrates. Results indicate that, when the father is away, household labor increases for girls and decreases for mothers. This is inconsistent with a unitary model in which decision-making is cooperative and individuals simply reallocate time to compensate for the father's absence. Furthermore, outcomes that are easily observed---child schooling, health---are not affected by migration, controlling for income. This is inconsistent with a non-unitary model in which mothers' bargaining power increases when fathers migrate. To explain the results, I propose a simple model of contracting under asymmetric information.

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