Economics of Education Review 18 1999 311–325
Community effects and desired schooling of parents and children in Mexico
Melissa Binder
Department of Economics, University of New Mexico, 1915 Roma NE–SSCI 1019, Albuquerque, NM 87131-1101, USA Received 1 November 1996; accepted 1 July 1998
Abstract
This paper investigates community effects in the determination of desired schooling in a sample of more than 300 school children and their parents in three Mexican cities. Community residence is found to be a significant predictor
of desired schooling of parents and children, even with comprehensive controls for child and family traits. Measurement error and omitted variable bias are considered, but rejected, as principal causes of this result. A comparison of recent
and long-term residents of a community reveals that the predictive power of residence is much stronger for long-term residents. This result is interpreted as evidence of community effects, since the alternative hypothesis of Tiebout
behavior predicts a stronger common effect for recent migrants. Potential sources of the community effects are then investigated with neighborhood-level data from the 1990 Mexican Census.
1999 Elsevier Science Ltd. All rights
reserved.
Keywords: Community effects; Education in developing countries
We wanted our children to continue studying, but they saw their friends in the streets, and working, and
they didn’t want to go to school any more Mother in El Cerro del Cuatro, Guadalajara.
1. Introduction
It is widely acknowledged that family characteristics such as household income and parent schooling affect
the costs and benefits of schooling. A wealthy family can finance the costs of schooling internally—and therefore
more cheaply—than a family borrowing externally. A better educated parent may have more knowledge about
the schooling system, lowering the cost of collecting information about it. Similar reasoning also holds for
community characteristics. For example, consider a com-
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munity that has no neighborhood high school, and few residents who ever attended high school. In this com-
munity the costs of learning how to enroll in high school will be relatively high.
Described in this way, the neighborhood characteristic itself helps to explain behavior. But the contention that
neighborhoods “matter”—or that true community effects exist—is controversial. The problem is that people are
not randomly assigned to their neighborhoods: they choose them for a reason. Presumably if parents plan to
send their children to high school, they will look for a neighborhood that has one nearby. Children living in
neighborhoods without high schools may have difficulty in attending them, not because their parents face large
costs in getting information about them, but because their parents didn’t value education enough in the first place
to move into a neighborhood that had one. This is the gist of the argument of Tiebout 1956, that like people
self-select into the same neighborhoods.
Whether community effects or Tiebout behavior is operating matters from a policy perspective. For
example, busing is a plausible solution to unequal
312 M. Binder Economics of Education Review 18 1999 311–325
schooling outcomes if community effects exist. But if Tiebout behavior dominates, where a child goes to
school should make little difference. Unfortunately, the two theories are difficult to dis-
tinguish empirically, since a finding that communities matter does not rule out the possibility of an unobserved
trait that all families in the community share Jencks Mayer, 1990; Manski, 1993. In this case, The shared
trait matters, and not the community per se
1
. Neverthe- less, as Jencks and Mayer 1990 argue, the community
effects and Tiebout theories predict opposite effects for length of residence. If the community matters, then pre-
sumably it will matter more over time: new-comers will be less affected by it. If self-selection matters, then the
community trait will describe new-comers best, since they are choosing where to live now, as the community
exists today, and long-term residents may have made their choice under different community conditions. In
applying this distinction to a new data set that records the desired schooling of Mexican school children and
their parents, I find evidence for true community effects: the desired schooling of recent migrant adults for their
children is not significantly predicted by their communi- ties, whereas for long-term resident adults, community
residence is a highly significant predictor.
I begin by setting out the theoretical importance of desired schooling and the potential role of community
effects in its determination. I then present the data and explore the empirical content of desired schooling. I find
that desired schooling is largely determined by com- munity fixed effects. These effects cannot be explained
by measurement error or omitted variable bias, and, through the length of residence test, appear to reflect true
community effects. Finally, I investigate the cause of these effects by using neighborhood-level data from the
Mexican Census. Schooling and income levels of the community are significant predictors of desired school-
ing, but school enrollment figures for neighborhood youth are not.
2. Demand for schooling, desired schooling, liquidity constraints and neighborhoods
