The Schubert Effect: When Flourishing Businesses Crowd Out Human Capital

Guido Friebel (), Jibirila Leinyuy and Paul Seabright

World Development, 2015, vol. 68, issue C, 124-135

Abstract: We show that in family or household firms, credit constraints can make business investment a direct competitor to educational investment. We test this theory on data collected in Cameroon. Households that are not restricted by credit constraints invest more in education when demand for the product they produce and sell increases. However, credit-constrained households react in the opposite way: when demand increases, they invest less in education, as predicted by our theory. We obtain these results controlling for endogeneity of family size, of demand conditions, and credit constraints.

Keywords: credit constraints; human capital; business prospects; family firms (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:68:y:2015:i:c:p:124-135

DOI: 10.1016/j.worlddev.2014.11.022

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