The Effect of Household Wealth on Educational Attainment: Demographic and Health Survey Evidence

Abstract

While household wealth is strongly related to educational attainment of children nearly everywhere, the magnitude and pattern of the effect of wealth differs widely. The gap in attainment of children of the poor and rich ranges from only one or two years in some countries to nine or ten years in others. This attainment gap is the result of different patterns of enrollment and dropout: While in South America low attainment among the poor is almost entirely due to children who enroll then drop out early, in West Africa and South Asia many poor children never enroll.

Using household survey data from 44 Demographic and Health Surveys in 35 countries, Filmer and Pritchett document different patterns in the enrollment and attainment of children from rich and poor households. They find that:

Enrollment profiles of the poor differ across countries but fall into distinctive regional patterns. In some areas (including much of South America) the poor reach nearly universal enrollment in first grade but then drop out in droves. In others (including much of South Asia and West Africa), the poor never enroll. Both patterns lead to low attainment.

There are enormous differences across countries in the wealth gap - the difference in enrollment and educational attainment between the rich and the poor. In some countries the difference between the rich and poor in the median number of years of school completed is only a year or two; in others the gap is as great as nine or ten years.

The attainment profiles can be used as diagnostic tools to examine issues in the educational system, including the extent to which enrollment is low because of the physical unavailability of schools.

Filmer and Pritchett overcome the lack of data on income and consumption expenditures in the surveys by constructing a proxy for long-run household wealth, using survey information on assets and using the statistical technique of principal components.

This paper - a product of Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to inform education policy. The study was funded by the Bank`s Research Support Budget under the research project Educational Enrollment and Dropout (RPO 682-11).