Keep your friends close: The effect of local social networks on child human capital outcomes

a r t i c l e i n f o Social networks can affect demand for human capital investments by relaxing household time or budget constraints or by defining and reinforcing human capital preferences. However, empirically identifying the effect of social networks on human capital investment is usually problematic because households self-select their networks in ways that may be correlated with their abilities to make these investments. In Northern Ugandan Internally Displaced Persons Camps, networks were not entirely self-selected. Rebel activity, which forced households into camps in 2002, disrupted pre-existing social networks in ways that were exogenous to household human capital preferences. This paper uses the exogenous variation in network disruption to identify a positive impact of networks on children's long-term nutritional outcomes. Local social networks – the people that a household spends time with on a daily basis – can critically influence time-sensitive household behaviors. In particular, these local networks may affect the level of households' daily investments in children's nutrition, which is determined largely by the interaction of time-consuming care-giving practices and food and health resource availability. In most cases, it is impossible to demonstrate whether or not these networks ultimately improve child nutritional outcomes because households self-select into networks in ways that may be correlated with their abilities to invest in their children's nutrition. Using data collected in Northern Uganda, this study takes advantage of an exogenous disruption to households' local social networks, caused by a rapid escalation of a long-standing civil conflict, to show that the presence of a household's local network improves nutritional outcomes of the household's youngest members. Recent empirical work has demonstrated the importance of a household's social network to a number of economic outcomes and decisions , such as access to employment (e. In developing countries, the role of social networks may be more important as a means of overcoming market failures or the absence of other institutions. Trust relationships function in the absence of contract-enforcement mechanisms This paper focuses on a specific type of network, the local social network, that influences households' investments in child nutrition through daily contact with household members. The cumulative effect of these daily investments improves nutritional outcomes. A households' social network in general can influence the households' ability to make nutritional or health investments by expanding the household resource pool or reducing investment risks. Local social networks increase investments in child nutrition in ways requiring …