Parental Expenditures on Children Education - Essay Example

Parental Expenditures on Children Education Introduction The article “Parental Expenditures on Children Education” examines the factors influencing allocation of money on children`s primary and secondary education. The paper is based on the data received during families’ survey from Consumer Expenditure Survey. The paper seeks to explore the interdependence between family status, age, race, education, the sphere and the level of employment as well as amount of money spent on children. Moreover, such factors as season of the year, region of living may also have certain impact on the level of parents` expenditures, which also constitutes the question of the article. Statement of the problem The research aims to distinguish the extent to which different factors affect the decision of parents to invest or not invest money in children`s primary and secondary education, and the extent to which these factors are connected with an amount of money spent. Not to intermingle with researches that deal with basic amount of money spent on miscellaneous children`s needs in the process of raring, this study explores the costs spent on tuitions, books, supplies for primary and secondary education. Source of the problem Little attention was paid to the interdependence of parents` expenditure on children`s primary and secondary education and the factors affecting this choice. Therefore, due to the lack of material the problem has naturally arose. Significance of the problem The significance of the study is explained by its innovativeness. Most of the researches are dedicated to the investigation of the level of parents` expenditures during the process of upbringing on general issues such as housing, food, clothing, transportation, and health care. Thus, this research is important as it allows to explore the connection between money investment in children`s primary and secondary education and the factors influencing this decision in a narrow sense. In certain studies, the educational component was included only as additional and little attention is paid to this aspect of parents money allocation to children`s primary and secondary education. Thus, empirical research may provide necessary information regarding parents` investment. Feasibility of the problem for study The feasibility of the problem of the study was ensured by the data received from empirical studies motivating children`s attainment. The theory of human capital was also employed in the process of data assessment. Cragg`s double-hurdled model was utilized to assess the results of the interviews of 331 families investing their money in children`s education conducted by Consumer Expenditure Survey in 1996 Scope of the literature review In the given article, substantial amount of literature has been reviewed concerning the given topic. Firstly, the authors analyzed the literature, which dealt with the study in indirect way. Previous researches concentrated on time allocated to children by their parents, college investments, and expenditures in the total sense including miscellaneous costs. Most of the researchers are determined to investigate the money spent on child rearing totally. Olson (1983), who calculated that 13% of the total sum constitute education expenditures, provided import information regarding education expenditure. Lazear and Michael (1988) defined direct interdependence between general family income and education expenditure, subsequently, the costs rose proportionally to the quantity of children in the family. Lino (1995) managed to assess the proportion of the budget spent on such necessities as housing, food, clothes, transportation, healthcare in the double-parent families with more than one child and concluded that the larger part of the expenditure on little children is connected with housing while the smallest with health care for middle and high income families. For the low income families education and childcare were on the last places among budgetary expenses. The expenses for education constituted 6% and 8% respectively for the low income and high income families. Thus, the research, which would concentrate mainly on primary and secondary education expenditure was not conducted, and there is evident lack of literature on this topic. Theoretical context of the problem Human capital theory was utilized in this study in an attempt to define the decisive factors for parents` investment in primary and secondary education. The theory claims that the parents are prone to spend time and money on their children`s education if they recognize it as investment rather than obligation. Moreover, the degree of investment may be stipulated by the potential of the children (Becker, 1964). In most cases family income is in proportion to the children`s educational progress, which is explained by higher family`s investments into their human capital. Hypothesis/Research question The article is aimed to investigate the correlation between parents` expenditure on children`s primary and secondary education and the factors which may affect this. The researchers suggest that the investment in the education is dependent on certain factors, such as age, race, total income, education experience, employment and seek to determine the degree of dependence and the variation of expenditure. Eight hypothesis were made for this study. The expenditures on children`s education are dependent on the level of parents` income; The number of family members stipulates the investment. The larger the family, the more money is invested in education; College degree(Bachelor`s or Master`s) serves an additional factor which stimulates; parents to spend money on primary and secondary education of the children; Increases in the parents` age increases the possibility of larger expenditures; Unemployed parents are less likely to make investments in primary and secondary education of their children; White parents are more likely to invest in their children than Black or Other; Marital status does not influence allocation; The possibility of expenditure increases with the age of the younger child. Variables of interest The explanatory variables are mother`s education, age, employment status, and race. Father`s data was used only in case of a single-parent family case without a mother. The response variable is money spent on the following educational needs: school transportation, studying materials, supplies and equipment, supplementary literature, elementary and high school tuition, rental of any school supplies. Continuous variables are income of 10,000 dollars and the number of children in the family. The research also included control variables such as the region of residency (urban or rural), and the season of the year when the expenditures were made. Methodology Empirical study was the method of information achievement. The data received in the course of interview of 1,158 families with children from 6 to 17 year old was used for the research. Gragg double hurled model was used for the data assessment. Description of the design Gragg model, “a statistical method of data analysis with truncated response variables when the traditional corner solution where changes in relative income prices or results in positive consumption may not hold”, was utilized (Blaylock & Blisard, 1992).The main plus of this method is that it permits for variables to have various effects on inclusion and allocation choices. Sampling design CE arranges researches regarding expenditure, income, and basic socioeconomic and demographic changes in households on regular basis. A national sample of consumer units are interrogated once in a quarter during five quarters. Measurement instruments Interview conducted among 1158 families by Consumer Expenditure Survey was supposed to provide data for further Cragg statistical method. Gragg model permits for effective maximizations in two stages. The first stage is participation equation estimated using a probit. The second stage is expenditure of allocation decision is estimated using the distribution of non-limit observations in a truncated regression equation (Blundell & Meghir, 1987). Reliability and validity of those instruments The validity and reliability of such instruments for this type of research is indisputable as only with the help of empirical survey it is possible to receive data regarding social tendencies of expenditure. Sources of measurement error Given limited previous research on expenditures on primary and secondary education to suggest otherwise, it was assumed, that the error terms in the truncated regression equation were independent. Data analysis The median total expenditure for children education was 300$ while the mean was 877$ for the families with any. The scope of different factors analysis defined that tuition was the largest investment of the families with the median of 2,369$ for the 76 families. The Cragg model permitted evaluation of the statistical criterion as well as direction of relationship for the factors hypothesized to be related to both the allocation decision and the involvement in participation. The results demonstrated the prevalence of some factors for certain decisions. Higher after-tax income was the index of larger investment into primary and secondary education. Presentation of results. Use of tables. Table 1 represents Means and Proportions of the Explanatory Variables while table 2 represents parameter estimates for Gragg model of expenditure on children`s education. Interpretation of results The results achieved in the research mainly supported the suggested hypothesis of interdependence between the factors of the family and their decision and amount of expenditure on primary and secondary education. Communicating findings Parents education, age, and sex were the dominant factors of influence on the level of expenditure. Nevertheless, employment status, marital status and the age of the younger child were not considerably related to the money allocation. The degree of the parent influenced the expenditure on primary and secondary education of the child. If a parent had only high school diploma the probability of investment decreased considerably. Parents after 30 spent significantly larger amounts on children`s education than parents under 30 (on average parents after 39 spent in 3,35 times more than parents of lower age). The likelihood and the amount of money are both dependent on the area of living, whether it was rural or urban. The investment of the families living in the country area was always significantly lower than the comparing expenditure of city family. Even the season of the year serves as significant factor of money allocation: the expenditure was more likely in summer and the less likely in autumn. Discussion of findings The results achieved in the research support the hypothesis to the certain extent. Most factors such as age, race, education level, marital status, after-tax income are significant for the parents` decision of money investment. Nevertheless, certain limitations are observed. Limitations There could have been certain misinterpretations and non-reporting as only 30 % of respondents confirmed their expenditure in primary and secondary education. It is also possible the the parents also neglected minor investments in school supplies and books. The CE data does not provide any information regarding the quality of education provided or parents preferences regarding certain types of primary and secondary education, such as home schooling, public or private school. Moreover, no data regarding children`s characteristics is available though it can be one of the most influential factors on the likelihood of parents` investment in primary or secondary education. It is possible that the mentioned limitations provide an explanation for the lack of significance of the explanatory variables in the participation decision. The research also does not provide information on the casual nature. The long-term as well as short-term effects of the money allocation cannot be distinctively followed. Implications for the practitioner The research might help the parents on the decision taking regarding money investment in children`s primary and secondary education. Any research conducted in this sphere concentrated mainly on the investments in the child rearing in total sense. This article allows the parents to asses possible expenditure on primary and secondary education in order to make more relevant decision. Implications for future research Further research is necessary to examine the interdependence between parents` investment and the outcomes of this allocation for children. As there certainly must be long-term and short-term outcomes dependent on the allocation this data should be examined more thouroughly. References Becker, J. & Thomas, N. (1986). Human capital and the rise and fall of families. Journal of Labour Economics, 14(4), 299-315. Blaylock, J. & Blisard, W. (1992). The cost of children in urban United States. Berkeley: University of California Lazear, E. & Micheal, L. (1988) Allocation of income within the household. Chicago: University of Chicago Press. Lino, M. (1995) Expenditures on children within by families. 1994 annual report. Washington DC: Miscellaneous Publications. Read More