NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Esther I. Gehrke

Department of Agricultural Economics and Rural Dev
Platz der Goettingen Sieben 5
37073 Goettingen, Germany

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Institutional Affiliation: University of Goettingen

NBER Working Papers and Publications

November 2017Consumption Risk and Human Capital Accumulation in India
with Andrew D. Foster: w24041
We study the consequences of dynamic complementarities in the production of child human capital for the relationship between risk and schooling investment in a low income setting. In contrast to previous literature, we explore the ex ante response of schooling to risk. We develop a model that incorporates, dynamic complementarity in the education production function, ex-post labor market responses by mothers to income shocks, and substitutability between maternal and child work in the household. We test the model using data from rural India, focusing particularly on the schooling of girls. We find that risk substantially reduces the probability that girls attend school. We then simulate the effects of an implicit social insurance program, modeled after the National Rural Employment Guarant...
 
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