This article provides the first systematic study of the short- and long-run effects of parental death on the cognitive, noncognitive (locus of control), and physical development of Indian children. Exploiting rich longitudinal data over 15 years, I use difference-in-differences with individual fixed effects to account for time-invariant ...
This article provides the first systematic study of the short- and long-run effects of parental death on the cognitive, noncognitive (locus of control), and physical development of Indian children. Exploiting rich longitudinal data over 15 years, I use difference-in-differences with individual fixed effects to account for time-invariant unobserved heterogeneity between orphans and non-orphans and investigate the mechanisms. This method is an improvement over previous cross-sectional approaches to such explorations. I find that paternal death is negatively correlated with orphans' cognition but is not correlated with locus of control or physical health. Cognitive effects are mediated by a 10-percentage-point-lower probability of enrollment and a 20% decline in monetary investments in the child, eventually leading to one less year of schooling by age 22. These negative outcomes are concentrated among the least wealthy families, who respond to the shock by reducing consumption and increasing their labor supply.
