Household Risks and Household Human Capital Investment: Longitudinal Evidence from Thailand

Much of the literature on household human capital investment examines the relationship between exogenous variables, such as fundamental household characteristics, supply, and quality of school, and child enrolment. Little attention has focused on the impact of household risks on a household's educational expenditures. Using a series of Thai household socio-economic panel surveys, and using an instrumental variable Tobit regression, this paper provides an analysis of the impact of three types of a household risks on the educational expenditures of households. Controlling for household-head, child and other members, and regional characteristics, and by using samples from the entire country and rural areas, this paper finds that income risks (which consist of transitory income shock and income uncertainty) have a significant negative effect on educational expenditure for all groups of households. The results also show that unemployment has a significant negative relationship with educational expenditure for some Thai households, especially those in urban areas, while illness has no relationship with educational expenditure in any of the sample groups.