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Under- and over-investment in education: the role of locked-in fertility

Masao Nakagawa, Asuka Oura and Yoshiaki Sugimoto ()
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Masao Nakagawa: Hiroshima University
Asuka Oura: Daito Bunka University
Yoshiaki Sugimoto: Kansai University

Journal of Population Economics, 2022, vol. 35, issue 2, No 12, 755-784

Abstract: 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.

Keywords: Irreversibility; Quantity-quality trade-off; Human capital; Growth (search for similar items in EconPapers)
JEL-codes: D10 J13 J24 O15 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s00148-021-00823-8

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