DefinePK

Abstract

Human capital accumulation is closely related to development indicators, such as, socioeconomic status and workers’ productivity. The study aims to assess the impact of difference in aspirations between communities on schooling investment, instrumented by arrival of a factory. The study uses the dataset of 2010-11 of Privatization in Education Research Initiative (PERI), which comprises a sample of children aged 5–14 who are currently enrolled in schools. By applying the Instrumental Variable (IV) analysis, it is found that aspirations motivated by the external factors have a pronounced impact on investment in schooling. Moreover, impact on investment is channeled into expenditures rather than the private schools enrolment.