DAUGHTERS, EDUCATION, AND FAMILY BUDGETS - TAIWAN EXPERIENCES

Growth in the education of the labor force is one of the most importan t determinants of economic growth, and the distribution by sex is a ke y determinant of gender inequality. In this paper, we examine how pare nts choose to invest in sons' versus daughters' education and the cons equences of these choices for women's life chances. We explore this is sue with retrospective data on the life cycle and family behavior of T aiwanese individuals who came of age fr om the 1940s onward. Since the lives of these cohorts encompass one of the most rapid economic and d emographic transitions in history, evidence from their experience is o f particular value in sorting out alternative hypotheses. Broadly, whi le contradicting crude forms of East Asian models of patriarchal famil ies, our findings support economics models of the family in which atte mpts by altruistic parents to finance optimal investments in their chi ldren's human capital are frustrated by credit constraints. We find th at early-born children in large families do particularly poorly, espec ially if they are female and can, hence, marry early. In poor families and in older cohorts, older sisters help increase the education of yo unger siblings of both sexes. However, in more recent periods and amon g more affluent families there is less need for one child to sacrifice for another and the effects of family size and gender composition are markedly weaker. From international and historical comparisons, we co nclude that patterns of behavior observed during Taiwan's economic dev elopment may apply broadly around the developed world.