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APPENDIX 123


ments. If the latter effect is sufficiently small, we expect that schooling inequal- ity between siblings will diverge.11


Second, suppose that children are born in different time periods. In the case of a small discount factor, parents may want to invest more in the school- ing of older siblings, sacrificing the human capital for younger siblings, in order to gain returns to human capital as early as possible. If older siblings’ time input is important (included) in young siblings’ health capital production, older siblings can work at home to take care of younger siblings. In this case there is a trade-off between schooling investments in older siblings and time input in the health capital formation of younger siblings, which depends on the discount factor.12


11 Quisumbing, Estudillo, and Otsuka (2003) present evidence from the rural Philippines, where boys are likely to inherit land, showing that parents invest more in the schooling of daughters than in that of sons, to equalize lifetime earnings between them. In the Philippines Schady (2003) and Yamauchi (2005a) both show that the schooling return function is convex; the latter


contrasts this finding to the case of Thailand, where schooling returns are concave. 12 Nonneutrality of birth order and sibling’s sex composition in child human capital investment are pointed out and analyzed in, for example, Rosenzweig (1986), Butcher and Case (1994), Rosenzweig and Wolpin (2000), and Black, Devereux, and Salvanes (2005).


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