This paper uses an applied general equilibrium framework in which family labor use, including the labor of male and female children, is incorporated to examine the effect of income subsidy schemes designed to encourage schooling of children on intra-household resource allocation within rural households in Bangladesh. Various subsidy schemes that are tied to hours of schoolwork by girls or all children are examined under existing preferences and under altered preferences that increase the desire for schooling. The effects of these subsidy schemes are compared to a general income subsidy as well as a scenario where the demand for increased paid domestic work, which often is female child intensive, increases. It is found that household welfare increases most when a subsidy is combined with households altering their preferences by placing greater value on the education of girls. The success of policy experiments that have combined advocacy and educational reform with economic incentives can be explained from this finding.


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pp. 249-267
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