Parental Human Capital Investment Responses to Children's Disability

Abstract

This paper investigates whether parental decisions to invest in education of their disabled children are driven by equality or efficiency. Even if parents are inequality averse, they may still choose to invest more in non-disabled children than in disabled children if there are additional costs of parental inputs associated with disability. I show that variation in family size and children's disabilities can be used to infer whether parents are averse to inequality exploiting the fact that parents of only children cannot possibly exhibit inequality aversion. Using Mexican cross-sectional data, I show that equality is important for parental investments in education.