We Don't Need No Education: The Effect of Persistent Income Shocks on Human Capital

Phoebe W. Ishak and Mark Gradstein

VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association

Abstract: We explore the effects of persistent income shocks on human capital using oil price fluctuations in a large sample of relevant African countries and employing micro data from multiple waves of the Demographic and Health Survey (DHS). Theoretically, such shocks enable human capital investment via the standard income effect; but also crowd it out because of substitutability between natural resource and human capital income sources - so the net outcome can go either way. Our model suggests that the relative strength of the two effects depends on the age at which the shock is experienced and the affected gender. Consistent with these insights, we find that income shocks in early life enhance educational attainment and other derived outcomes; but reduce them if experienced in adolescence, especially for females. These results survive multiple robustness checks, and their broader implications are discussed.

Keywords: Human capital; income shocks; natural resources (search for similar items in EconPapers)
JEL-codes: I2 O12 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/242368/1/vfs-2021-pid-49313.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc21:242368

Access Statistics for this paper

More papers in VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().