Work

Investing in the Next Generation: The Long-Run Impacts of a Liquidity Shock

Year: 2024

Type: article

Abstract: Poor entrepreneurs must frequently choose between business investment and children's education. To examine this trade-off, we exploit experimental variation in short-run microenterprise growth among a sample of Indian households and track children's education and business outcomes over eleven years. Treated households, who experience higher initial microenterprise growth, invest more in education and are one-third more likely to send children to college. However, only literate households experience child schooling gains and their enterprises stagnate in the long-run. In contrast, illiterate treatment households experience long-run business gains but declines in children's education. Our findings suggest that microenterprise growth has the potential to reduce relative intergenerational educational mobility.

Source: American Economic Review

DOI: 10.1257/aer.20220296

Authors: Patrick Agte, Arielle Bernhardt, Erica Field, Rohini Pande, Natalia Rigol

Institutions: Yale University, New York University, Duke University, Harvard University

Language: English

Topic: Intergenerational and Educational Inequality Studies

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty, Quality education

Open Access status: green

Funders: National Institutes of Health, Eunice Kennedy Shriver National Institute of Child Health and Human Development