The Influence of Family Importance on Human Capital Accumulation

1. The Influence of Family Importance on Human Capital Accumulation John Paolo R. Rivera Rosanina A. Sayoc Dustin Timothy D. Ang School of Economics De La Salle University 27 November 2012

2. Country Situationer • Strength of Family Ties Index korea japan china • Source: Alesina & Giuliano, (2010)

3. INTRODUCTION • The Family • Represents society in a micro-level perspective determined by family relationships, behavior, incentives and expectations • Affects multidimensional aspects of an individual • Family ties exhibit stronger in other nations due to differences in history, culture and traditions • Central force in shaping childhood outcomes • Transmission of genetic attributes and cultural values from parents to children

4. INTRODUCTION • Human Capital Accumulation • Family ties influence decisions on investments in education • Choice initially made by parents on behalf of their children Research Objectives To state a working definition for the term family ties To establish quantitative measure for the strength of family ties using qualitative and behavioral responses from the World Values Survey (WVS) To measure the likelihood of an individual attaining a level of education given his or her strength of family ties

5. LITERATURE REVIEW Human Capital Theory views education as an investment where the costs and benefits are considered. Demonstration effect illustrates the intergenerational decisions and influence of parents in shaping children’s preference, behavior and outcomes. Socio-demographic factors include individual household characteristics such as the age, sex, marital status, employment status, income of the household head.

6. How do we go about this? • Qualitative Response Model (QRM) • Ordered probit model • Dependent variable is ordinal and categorical in nature: level of educational attainment • World Values Survey(WVS) • Qualitative household characteristics and demographics • Cross-section data from WVS Wave 1999-2004 for 7 East Asian economies

7. How do we model this scenario? • Where • EDUCAi is the level of educational attainment of the household given by 5 categorical outcomes • STRFTi is a vector comprising of five different aspects of the family • COUNTRYiis a vector of country dummies for selected East Asian economies • Other social demographics to be explained further

8. How do we model this scenario?

9. How do we model this scenario?

10. How do we model this scenario?

11. How do we model this scenario?

12. How do we model this scenario? • Note: If all categories of dummy variables above assume a value of 0, then that is the base category

13. RESULTS AND DISCUSSION

14. Family Importance

15. Parental Duties

16. Respect and love parents

17. One of main goals has been to make parents proud

18. More emphasis on family life

19. What are our findings? • Only two out of five definitions of family ties influence level of educational attainment • Consistency in current and future perceptions evidence demonstration effect • Prestige and value for the family translates to self • Overall impact exhibits larger influence • Explains constraint of socio-economic characteristics • Age, sex and income levels are consistent with literature • Variables not captured by the model that are country specific may be at work

20. What can we conclude? 7 EAST ASIAN ECONOMIES

21. CONCLUSION • We were able to contribute an empirical definition of family ties by utilizing significant aspects • Family importance and more emphasis on family life comprise the definition • Evident of the demonstration effect • Valuing the family translates to valuing the self • Two out of five aspects of family ties influence the likelihood of individuals to obtain a certain educational attainment • Widespread insignificant estimates despite distinctions in location and levels of education for other three

22. CONCLUSION • Certain socio-demographic variables hold an even more significant weight • Generally consistent with literature • Effectively captures true financial and economic capacity to invest in education • Inconsistencies • In marital status due to prioritizing other self-interests • In employment status due to work and study trade-off • In relation, family support can ease financial problems and shoulder costs of higher education

23. CONCLUSION • Overall, five sub-definitions of family ties converge to a general result for the seven East Asian economies • Demographics matter more which are attuned to country specific factors • There is no one definition that is all-encompassing • Country dummies indicate varying capacities of East Asian economies to achieve higher educational attainment • Unobserved heterogeneity ascribed to different standards, facilitation and provision for education

24. CONCLUSION • Each economy can define family ties differently based on norms • Achieving higher educational attainment can be facilitated by economic, behavioral or psychological factors

25. The Influence of Family Importance on Human Capital Accumulation John Paolo R. Rivera Rosanina A. Sayoc Dustin Timothy D. Ang School of Economics De La Salle University 20 October 2012