How Do Idiosyncratic and Covariate Shocks Affect Human Capital Outcomes For Ethiopian Children
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Previous literature has mostly looked at the impact of singular shocks on children’s human capital. In this paper, we explore how disparate idiosyncratic and covariate shocks affect the cognitive, health and time allocation outcomes for a sample of Ethiopian children during the later stages of childhood. We also examine how these relationships differ based on rural/urban location and age groups. Employing a fixed effects panel model, we find that loss of employment, theft, damage to home, and pests affecting crops have the highest negative impact on multiple dimensions of human capital. Moreover, we also find that monetary shocks, especially in rural areas, affect children’s human capital more than natural disasters in Ethiopia. Finally, the relationship between shocks and human capital changes based on the location and age group of the child.
Abstract
Previous literature has mostly looked at the impact of singular shocks on children’s human capital. In this paper, we explore how disparate idiosyncratic and covariate shocks affect the cognitive, health and time allocation outcomes for a sample of Ethiopian children during the later stages of childhood. We also examine how these relationships differ based on rural/urban location and age groups. Employing a fixed effects panel model, we find that loss of employment, theft, damage to home, and pests affecting crops have the highest negative impact on multiple dimensions of human capital. Moreover, we also find that monetary shocks, especially in rural areas, affect children’s human capital more than natural disasters in Ethiopia. Finally, the relationship between shocks and human capital changes based on the location and age group of the child.