Intra-Budget Consumption Substitution for Female Schooling
RCTClinical Trial
When total household budget constraints are fixed and credit markets are constrained, families must finance increased educational investments for daughters by reallocating money away from other everyday household consumption categories.
Picture this
Imagine a family with a strict monthly food and household budget box. When they decide to buy expensive new textbooks and tuition for their daughter, they do not get more total money in the box; instead, they shave a tiny slice off entertainment, clothing, and non-essential groceries so the overall box stays the exact same size while paying for the books.
What the evidence says
Total household monthly per capita expenditure remained unchanged (-21.2 INR, p > 0.10), but households with school-aged girls significantly increased the budget share devoted to schooling expenses, offset by small, statistically insignificant reductions across multiple other consumption categories.
- Who was studied
- 3,211 households across 160 rural Indian villages.
- How
- Longitudinal expenditure survey analyzing total monthly per capita expenditure alongside budget shares across specific expenditure categories.
What to do
Monitor detailed household expenditure shares alongside total consumption to identify how credit-constrained families internally reallocate funds to afford human capital investments.
From the source
"Consistent with these gains, and the high costs of schooling in India... the treatment led to an increase in the budget share devoted to schooling in households with school-aged girls."
517 labor market opportunities QJE April '12.pdf