Child Welfare in Rural Ethiopia: The role of Transfers, Old Age Support and Child Ability

This research examines intrahousehold resource allocation in rural Ethiopia with a focus on education and asset investments in children. Throughout our work we look for potential causes and signs of gender bias in childhood investments. In particular, we first look at whether poverty constrained households substitute the provision of asset and education transfers to their children. For this purpose we use a two-stages-least-squares model of educational demand which controls for the endogeneity of asset transfers. We find a trade-off mechanism between endowments of human capital and bequests to girls but not to boys. Secondly, we investigate the effect of parental transfers on the postmarital residence of children. We look at whether transfers induce old age security from children in the form of a postmarital residence close to the parents. We model postmarital residence using a multinomial logit which controls for the endogeneity of transfers. Our results show that off-springs who receive more assets are more likely to live close to their parents after marriage. On the contrary, more education induces children to leave their home at marriage. Finally, we analyze household choices between education and farm employment of children. We model these choices jointly while looking at how ability affects them. Our findings suggest that in the long-run, more able children accumulate more schooling and less farming experience. However, the latter only applies to boys; farming decisions regarding girls are independent of their ability. In summary, our research addresses four important factors affecting the welfare of children and young people in rural Ethiopia: educational investments, asset transfers, old age security mechanisms and child work decisions.