Maternal bargaining power, parental compensation and non-cognitive skills in rural China

The importance of non-cognitive skills in determining long-term human capital and labor market outcomes is widely acknowledged, but relatively little is known about how non-cognitive skills may shape educational investments by parents early in life. This paper evaluates the parental response to variation in non-cognitive skills among their children in rural Gansu province, China, employing a household fixed effects specification. The results suggest that on average, parents invest no more in terms of educational expenditure in children who have better non-cognitive skills relative to their siblings. However, there is significant heterogeneity with respect to maternal education; less educated mothers appear to reinforce differences in non-cognitive skills between their children, while more educated mothers compensate for these differences. The evidence is consistent with this pattern corresponding to greater bargaining power for more educated mothers and different preferences for compensation among more educated women. In addition, there is evidence that these compensatory investments lead to catch-up in non-cognitive skills over time for children of more educated mothers.