Investment in human capital by socioeconomic status in Uruguay

Abstract

The present study uses estimations of the National Accounts system by age and socioeconomic status to analyze inequalities in human capital investment in children. Socioeconomic status is proxied by the household head's education; children are the population under age 21; human capital comprises education and health consumption of National Accounts. The estimates suggest that funding human capital requires the re-assignation of resources between ages and socioeconomic groups and makes evident the central role of government interventions in redistribution. Nevertheless, differences in investment are relevant primarily because of investments funded with private resources. Estimates suggest that the improvement in socioeconomic level has different effects on the destination of resources allocated to children according to the starting level: first, consumption increases, then investment in education, and finally, investment in health.