Intra-Household Resource Allocation under Negative Income Shock: A Natural Experiment

Using households from coastal districts in Bangladesh, as a case, and applying the difference-in-difference estimation method, this paper demonstrates a gender-differentiated outcome of negative income shocks for education expenditures of households. The cyclonic disaster that reduced crop income substantially increased the demand for labor as well as wages for rebuilding damaged farms. This in turn increased the opportunity costs of boys' schooling, as reconstruction is a male-friendly sector. Consequently, parents withdrew their sons from school and engaged them in their households' repair work and/or in wage-earning activities. However, girls' schooling expenditure was unchanged in the affected farm and non-farm households.