| Abstract
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Using a unique data set from the Indonesia Family Longitudinal Survey, 2000, this thesis applies a “collective” non-unitary household model to the analysis of household decision-making and its impact on children's education. The vast majority of today's studies on the association between family background and children's education is based on the unitary household framework, where household members are assumed to pool their resources, and parental preferences are systematically aggregated. By contrast, the “collective” model relaxes those stringent, and in many cases unrealistic assumptions. This thesis hypothesizes that not only the pooled resources matter, but which parent controls those resources also matters, evidence indicative of heterogeneous preferences between mothers and fathers. Relative economic status between parents is an important source of intra-household bargaining power. The more bargaining power one parent has, the more likely household decisions would represent his/her preferences. However, earned income depends on how much a parent chooses to work, and therefore is endogenous. This analysis, instead, uses the value of assets brought to a household when parents got married as a proxy of intra-household power. Such assets are not related with any post-marriage choices, and therefore are exogenous; in addition, it is documented that in Indonesia, especially among the Javanese and Sundanese households, each parent retains control over his/her assets brought to marriage according to the local tradition. After examining children's education expenditure as a share of total household expenditures, their mathematics scores, and their cognitive assessment scores, this study finds that higher maternal economic status relative to paternal economic status has a significant positive effect on children's education expenditure shares as well as their mathematics and cognitive performance, implying that mothers care more about their children's education than fathers. There is, however, no observable gender favoritism by either mothers or fathers in general. Finally, this study finds evidence that on parental preferences tend to convergence the longer the marriage. The findings are the most consistent among Javanese and Sundanese households, and among urban households. The traditional unitary model is clearly rejected, suggesting empowering mothers would benefit children's education.
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