Parental Education and Investment in Children’s Human Capital in Rural China

Numerous empirical studies from developing countries have noted that parental education has a robust and positive effect on child learning, a result that is often attributed to more educated parents making greater investments in their children’s human capital. However, the nature of any such investment has not been well understood. This study examines how parental education affects various parental investments in goods and time used in children’s human capital production via an unusually detailed survey from rural China. It is found that more educated parents make greater educational investments in both goods and time and that these relationships are generally robust to a rich set of controls. Evidence suggests that making greater investments in both goods and time stems both from higher expected returns to education for children and from different preferences for education among more educated parents. A second key finding is that the marginal effect of mother’s education on educational investments is generally larger than that of father’s education.