Essays on Family Economics in Developing Countries

Abstract

In this dissertation, I attempt to better understand the inner workings of the household: Do parents favor certain types of children? When do parents decide to have their children work? How can we identify inequality within the household? These issues are fundamental to economic development and closely related to individual welfare. However, studying these questions is difficult since the household is in many ways a blackbox to economists; consumption data is typically collected at the household level, and concepts like bargaining power are not observable. My research examines these questions in a variety of different contexts in the developing world. In Chapter 1, I test for consumption inequality between foster and non-foster children in Sub-Saharan Africa. In Chapter 2, I examine the relationship between child labor and fertility in Nigerian households. Lastly, I study the identification of intrahousehold inequality in collective households in Chapter 3. Chapter 1: In “Consumption Inequality Among Children: Evidence from Child Fostering in Malawi", I study how resources are allocated among foster and non- foster children in Malawi. Child fostering is widespread in parts of Africa and the wellbeing of these children, who may be particularly vulnerable to impoverishment, is not well known. However, identifying individual-level consumption is difficult, since goods are shared and consumption is measured at the household level. Recent work on intrahousehold resource allocation has inferred child consumption from household- level spending on child-specific goods (e.g., child clothing). This literature is often dependent on the existence of goods in the data that are consumed exclusively by a particular type of person in the household. These studies are therefore limited by the level of assignability of goods within the consumption survey. Stated differently, to identify inequality between foster and non-foster children using existing techniques, I would need to observe expenditure on a good that is consumed separately by foster and non-foster children. Because I do not, I develop a new methodology using the collective framework to measure consumption inequality between foster and non-foster children. I find little evidence of inequality between foster and non-foster children. I then divide foster children by whether the child is orphaned, and I find that orphan-foster child consumption is 23 percent less than non-orphan foster child consumption. The results of this paper suggest that policymakers should design programs to improve the relative standing of orphan-foster children in the household. The methodological contribution of this paper is applicable to other contexts as intrahousehold inequality among children is widespread. Chapter 2: In “Child Labor Laws and Household Fertility Decision: Evidence from Nigeria" I study the Child Rights Act of Nigeria (CRA). In 2003, the Nigerian National Assembly implemented this law, which codified existing child labor standards and dramatically increased the penalties for employing children. I exploit the Child Rights Act to both understand the employment consequences of a child labor legislation, and to analyze the effect of lowering the economic value of children on fertility rates. Identification comes from variation in the timing of when each Nigerian state adopted the law, and from variation in the law’s age restrictions. Consistent with recent theoretical and empirical evidence, I find the Child Rights Act increased child employment at both the intensive and extensive margins. I then model household fertility decisions to demonstrate that the demand for children is increasing in child wages and therefore influenced by changes in the child labor market. I empirically test the model implications by examining the effect of the Child Rights Act on fertility rates, but find little to no effect. Chapter 3: In “Identification of Resource Shares with Multiple Assignable Goods" (with Caitlin Brown and Rossella Calvi), we study intrahousehold inequality. We develop a new methodology using the collective framework to identify resource shares, defined as the fraction of household resources consumed by each household member. We build upon recent work by Dunbar, Lewbel, and Pendakur (2013) (DLP) who identify resource shares by observing how expenditure on a single private assignable good varies with household income and size. They achieve identification by making semi-parametric restrictions on preferences across either household members or household sizes. Because our data contain multiple private assignable goods, we are able to employ this additional data to weaken the DLP preference restrictions using a different approach, which we call “Differenced-Similar Across People" (D-SAP). Under D-SAP, preferences for the assignable goods are allowed to differ entirely across both household members. However, we introduce a weaker restriction that requires that preferences differ across people in a similar way across goods.