Extended families and child well-being

Evidence is presented on the relationship between three distinct measures of health- and education-related human capital of children and the distribution of wealth among extended family members using rich longitudinal survey data from the Indonesia Family Life Survey (IFLS). The data are ideally suited for this research because the survey follows family members when they leave the family home and detailed information about individual-specific wealth is collected. We find that child human capital outcomes are affected by wealth of non coresident family members indicating that extended families do share resources. While the special case of the model in which all members are completely altruistic is rejected, the restrictions of the efficient model are not rejected, indicating that non co-resident family members are able to co-ordinate allocation decisions in such a way as to make no family member better off without another member being worse off.