Inheritance Law Reform and Human Capital Accumulation: Second Generation Effects from India Klaus Deininger, Songqing Jin, Hari Nagarajan and Fang Xia

Motivation Parental bequests of material wealth or human capital are a central way for transferring wealth across generations that can affect – asset accumulation, – individuals wealth and earnings opportunities (Blinder 1973), – and resource distribution in the economy (Becker and Tomes 1979, Stiglitz and Weiss 1981). Relevant legal provisions have been shown to affect the level of investment in family firms (Ellul et al. 2010). However, gendered analysis of this topic remained limited.

Motivation Females attach higher values to family needs or childrens welfare. – In South Africa, pensions received by females rather than males affected girls anthropometric status (Duflo 2003). – In China, higher female incomes following agricultural reforms increased the survival rates for girls (Qian 2008). – In India, exogenous increases in female income among lower castes increased investment in schooling for girls (Luke and Munshi 2011). The extent to which females have control over assets through intergenerational resource transmission will affect intra-household outcomes.

Motivation The effectiveness of legal changes in affecting behavior – Divorce legislation giving women the option to exit reduced domestic violence (Stevenson and Wolfers 2006b) and increased labor force participation by females (Stevenson and Wolfers 2007). – Reservation of political positions for women affected not only the supply of public goods (Chattopadhyay and Duflo 2004) but also longer-term views of females effectiveness (Beaman et al. 2009). Cases where legal interventions have been either ineffective or yielded negative consequences – Exogenous changes in factor endowments, technology, or the functioning of other factor markets have often been more significant and effective in empowering womens than legal provisions (Quisumbing 2004). – Well-intended Indian laws to overcome caste or gender discrimination remained ineffective (Anderson 2003).

Background The Hindu Succession Act (1956) – The Dayabhaga system (Bengal and Assam) identifies all property as separate property. – The Mitakshara system (the rest of India) classifies property as separate property and joint family property. A large fraction of joint family property is in the form of land. – The act granted daughters equal shares of deceased Hindus separate property as sons and spouses if the Hindus died without making wills, but excluded daughters and widows as coparceners for joint family property. – Therefore daughters received a smaller share than their brothers in the Mitakshara system. Amendments to the Hindu Succession Act (HSAA) – Proposed by some states in the last twenty years of twentieth century and expanded to cover the entire nation in – These amendments are essentially identical that grant daughters equal rights to inherit joint family property with sons.

Background The HSAA thus constitutes a natural experiment. – Roy (2009) finds that exposure to the amendment increased autonomy of Hindu females within their households, measured by self-reported indicators. – Deininger et al. (2013) find that the amendment increased the likelihood of Hindu daughters inheriting land. It also increased the age at marriage and the educational attainment for Hindu girls. – Rosenblum (2013) suggests that parents reduce investment in daughters health for maximizing bequest per son, which leads to an increase in female child mortality. – Our study is a natural extension of Deininger et al. (2013) by exploring whether, beyond an asset-transfer effect on the first generation, the legislation empowers females in the second generation.

Data A follow-up to the Rural Economic and Demographic Survey – The data were collected in 2011 by Indias National Council for Applied Economic Research in Maharashtra, Uttar Pradesh and Orissa. Information on three generations – Generation I includes the parents of household heads and spouses. We know they died or are still alive, and if died, the timing of their death. – Generation II includes household heads and spouses. We know their individual characteristics (age and education) and the gifts received at the time of marriage. – Generation III includes the children of household heads and spouses. In addition to individual characteristics (age and education), we know their time allocation in a typical day, expenses on education, and test scores for reading and math.

Average=80 Average=50 Average=23

Estimation Strategy A triple difference – A difference between generation III males and females within the same (generation II) household; – A difference between generation III individuals whose mothers fathers died before 1994 and those who died after 1994 or are still alive; – A difference between generation III individuals from Maharashtra where inheritance legislation was reformed in 1994 and the states of Orissa and Uttar Pradesh where legal changes were adopted only in Additional strategy for school completion – We replace the difference between Maharashtra and the non-reform states with the difference between the young cohorts whose primary or secondary education decisions were affected by the reform and the old cohorts who should have completed primary or secondary education when the amendment came into forth. – We estimate the Maharashtra sample for main analysis and run the same regressions based on the sample of non-reform states for a placebo test.

Conclusion Giving property rights to women has important intangible impacts on empowering them. – Through female empowerment effects, the HSAA increased generation III females time spent on studying as well as parental expenses on their education and thereby led to better reading performance and higher completion rates at primary and secondary level. Some follow-up research would be desirable. – First, exploration of variation in the amount of inheritance. – Second, exploration heterogeneous effects in terms of womens economic and social status. – Third, potential behavior changes in the marriage market and the labor market induced by the reform.