Credit constraints and the trade-off between family size and children's investment in Thailand

Using three-wave Thai household panel data covering the years 2005 to 2007, this study examined the effect of liquidity constraints on the quality-quantity trade-off for children. The results show that there was a quality-quantity trade-off for credit-constrained households, while there was no such trade-off for unconstrained households when a 6,000 Baht monthly income and ability to borrow were used as the classifying criteria. The evidence of the Q-Q trade-off is less clear when a 15,000 Baht monthly income is used. The quality income elasticity was found to be higher than the quantity income elasticity for credit-constrained households.