The Effects of Parental Loss on Child's Human Capital - Evidence from Taiwan

Lea Gimenez-Duarte, Lehigh University
Shin-Yi Chou, Lehigh University and National Bureau of Economic Research
Jin-Tan Liu, National Taiwan University and National Bureau of Economic Research
Jin-Long Liu, National Central University

We examine the causal effect of parental death (PD) on children’s educational attainment (EA). Previous studies have often treated PD as an exogenous event despite the fact that empirical studies have shown that morbidity is often correlated to SES. Our empirical strategy is aimed at overcoming such limitation. We use information on parental cause of death to introduce a source of exogenous variation that is orthogonal to a child's characteristics while still related to a child’s EA. Moreover, we employ parametric and nonparametric specifications to disentangle the effect of PD on EA from possible confounding factors. Our findings show that PD has a negative effect on a child's EA when the child is from a low income family; yet, it presents more severe negative effects on children from higher income families. Furthermore, the death of a mother presents larger negative effects on children’s EA than the death of a father.