Cognitive skills and intra-household allocation of schooling: do parents reinforce or correct for cognitive differences between siblings?

Abstract

Using household data from Northern Ghana, this study examines how cognitive skills affect the allocation of schooling across the children of a household. The analysis reveals that relative to the rest of the siblings in the household, an increase of one standard deviation in the score of cognitive tests increases by 0.123–0.237 the number of years of schooling attended in the following four years, depending on the cognitive test used. These results are consistent with the main prediction of the theoretical model for intra-household allocation of resources developed in the seminal paper Becker (1981): parents reinforce cognitive differences between siblings through allocating more human capital resources to the more able siblings. We find larger effects for boys than for girls while they do not differ significantly among poorer and less poorer households.