Schooling Education Investment, Intra-Household Externality of Literacy and Return on Peasant's Family Income: Theory and Evidence from the North Rural of China's Jiangsu Province

17 Pages Posted: 3 Dec 2008 Last revised: 14 Apr 2009

See all articles by Yanyan Gao

Yanyan Gao

Southeast University - School of Economics and Management

Date Written: December 2, 2008

Abstract

This paper uses the micro-data of north rural of Jiangsu province, combining with characteristics in agricultural production and peasant’s family, to calculate the returns of education investment on the whole family’s income. The intra-household externality of education caused by the facts of un-separabilities in agricultural production leads to a larger return of single member’s education on household income. The externalities, together with marriage match in education, however, decrease the return as the number of household member investing in education increases, which may result in “literacy congestion” or over-investment in education. The empirical investigation shows that education does cause literacy externality among family members and marriage matching does exist. Additionally, education return exhibits non-linear features. Contrary to our theoretical hypothesis, there are dynamic under-investments in education.

Keywords: education investment, family income, literacy externality, un-separability, marriage match

JEL Classification: J12, J24, D13

Suggested Citation

Gao, Yanyan, Schooling Education Investment, Intra-Household Externality of Literacy and Return on Peasant's Family Income: Theory and Evidence from the North Rural of China's Jiangsu Province (December 2, 2008). Available at SSRN: https://ssrn.com/abstract=1310221 or http://dx.doi.org/10.2139/ssrn.1310221

Yanyan Gao (Contact Author)

Southeast University - School of Economics and Management ( email )

Jingguan Building, Dongnandaxue Road 2, Jiangning
Nanjing, Jiangsu 211189
China

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