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Abstract
This paper uses three-generation retrospective data from the rural Philippines to
examine the role of the extended family, proxied by alternative measures of
grandparent coresidence, on investments in children. An extension of the wealth
model of intergenerational transfers shows that extended family resources may affect
transfers to children if parents are credit constrained. Family-level unobservables are
important in determining the allocation of education and land between sons and
daughters. Both parent and grandparent pre-marriage wealth affect children’s
completed schooling levels. Grandparent wealth, however, does not seem to affect the
distribution of education between sons and daughters, although it affects the allocation
of land. Grandparent influence on child schooling appears to work through proximity
rather than through wealth. Sons are clearly favored in terms of land inheritance,
while daughters get more education. Better educated fathers favor daughters in terms
of education, while mothers with more land favor sons. These patterns are consistent
with both equity and efficiency objectives, investment in children under resource
constraints, and parents' risk-diversification strategies.