Shadow education and the effects of family size on parental educational investment

Abstract The child quantity–quality (QQ) tradeoff is central to both household decision-making and long-run theories of economic development. Despite extensive research, there is little consensus regarding the sign of the effects of additional siblings on child outcomes. Most previous studies examine the relationship between family size and child quality indirectly through the consequences of the allocation of parental resources, such as educational and labor market achievements. Using Indian data, I present evidence of a quantity–quality tradeoff in direct parental monetary expenditures in shadow education (or private tuition). Exploiting the elder son preference typically observed in the study context, I instrument fertility with gender of the first child, two girls, and same-sex birth. IV estimates show a parity-specific quantity–quality tradeoff. The effects are heterogeneous. In wealthier families or those in urban areas, the trade-off is more pronounced.