Early Childhood Investments in Human Capital: Parental Resources and Preferences

This paper investigates the way in which parental human capital investment in young co-resident children varies with their own consumption. It is motivated by rejection of parental altruism in recent research, the unexpectedly small effects of parental income on child outcomes found in a number of studies, and the claim in several historical and anthropological studies of child labour that parents are selfish. Models of child labour and human capital typically assume parental altruism and, in many cases, this assumption is critical to the model. The results suggest that, in the preference function of parents, child human capital is a normal good and that child labour is a bad, consistent with altruism.