We review and critique the empirical literature on the links between investments in children and children's attainments. The primary theoretical perspectives that dominate this literature form the framework for our review. The potential effects on children of family choices and neighborhood characteristics are emphasized. The outcomes of interest include educational attainment, fertility choices, and work-related outcomes such as earnings and welfare recipiency. A set of tables provides details on the existing empirical literature. The focus is on the economics literature, but relevant studies from other social sciences are included as well.

Parents, courts, and legislatures have been struggling to define equal educational opportunity (minimum achievement level for all? minimum growth in achievement? differential growths in achievements?). At the same time, economists, sociologists, and educators have been struggling to identify which package of school inputs is required for each type of student to equip him or her for educational growth. Most empirical attempts to identify which inputs matter have concluded that schools barely make a difference. From this conclusion has flowed a prevailing nihilism with respect to schools as an egalitarian force. We conclude, on the basis of a microeconometric examination of Philadelphia School District data, 1) that many school inputs do matter, 2) that disadvantaged students can be helped by particular types of inputs, and 3) that the use of pupil-specific data, and statistical methods appropriate to such data, account for the cheerier results of this study. Little theory, economic or otherwise, is currently available to describe the determinants of educational achievement. Casual observation, combined with the education literature, suggests that achievement (A ) is a function of a student's hard-to-disentangle genetic endowment and socioeconomic status (GSES), teacher quality (TQ), non-teacher school quality (SQ), and peer group characteristics (PG). Thus,

Using 20 years of longitudinal data on nearly 900 girls aged 0 to 6 in 1968 (19 to 25 in 1987) from the University of Michigans Panel Study of Income Dynamics the authors measure the influence of family background individual characteristics economic resources (or the lack thereof) and the experience of particular disruptive family events on the probability that a teenager will give birth out of wedlock and subsequently apply for and receive welfare....Among the many findings of the investigators is that teenage daughters whose mothers have more education are less likely to give birth out of wedlock that teens whose mothers received welfare are more likely to give birth out of wedlock and receive welfare themselves and that teens who grew up in a home experiencing stressful events (e.g. parental separation geographic moves) are more likely to give birth out of wedlock. (EXCERPT)

tional attainments suggests the usefulness of special training programs for unskilled immigrants. Further, the persistence of racial differentials underscores the importance of the enforcement of anti-bias employment regulations to protect non-white immigrants. Recent changes in immigration law under the Refugee Act of 1980 will increase uncertainty regarding the composition of future immigration waves. It is likely, however, that the proportion of immigrants for whom specialized training and anti-bias regulation enforcement can hasten the traditional catch-up process which has historically characterized the immigrant economic experience will continually increase. Additional research using more recent data will allow both the efficacy of the recommendations advanced and the persistence of the observed patterns to be tested.

A latent-variable representation of health is used in a system that determines health and various indicators of health and health-care utilization for Nicaraguan women. Estimates differ somewhat from standard estimates. They imply that women's schooling increases health-care utilization, literate women report less disease incidence, women's childhood backgrounds affect their adult health and health-care utilization, and general resources favor childbirth-related care, but women's full income favors general care. The most significant result is that several important characteristics usually associated with development-women's schooling, household resources, and women's labor force participation-have inverse or no associations with women's health. Health status is hypothesized to be important in developing countries, both as a direct indicator of welfare and because of its possible impact on productivity. Health-care utilization also is of interest, both because of its relation to health status and because it is a particular manifestation of demand and supply for a 1 modem service. Work on the determinants of health status and health-care utilization in developing economies, however, is flawed because true health status is not directly observable. The indicators of health status that have been used in empirical studies-anthropometric measures, days ill, self-reported or clinical disease records, inputs such as nutrients, and health-care utilization indicesare imperfect indicators of underlying health status and generally do not give a congruent representation of that status. Thereby they may not measure adequately health status and their use may lead to biases in estimates and incorrect interpretations. We use a latent variable methodology for the first time to explore health status and health-care utilization in a developing country.' This approach employs systematic relations between various indicators of health status and health status itself and between health status and various related outcomes so that it is possible to estimate the determinants of health status and control for health status in other relations, even though health status is not directly observed. By using this methodology we obtain more satisfactory estimates of the determinants of health status and of health-care utilization in a developing country context than previous estimates using direct but imperfect proxies. This should improve the empirical bases for evaluating health and related policies in the developing world. I. Latent Variable Model of Health Status and Health-Care Utilization In the human capital tradition of analysis of health, individual health status is viewed as determined by individual demand factors given supply prices, environment, age and resources (including genes). Health-care utilization is a derived demand for a service which is used to produce better health. To incorporate the latent variable representation of the unobserved health status, we assume that the demand-supply health status and health-care utilization interactions, as well as the relation of other health indicators to health status, can be represented by the following linear system of relations:

gence on fertility and of household size on offspring's intelligence remain the subject of public debate. Most recently, attention has centered on the decline in Scholastic Aptitude Test scores and the possible effects of the postwar baby boom. These concerns suggest that economists would do well to introduce intelligence into the household utility maximization model used to explain differential fertility. We attempt to do this here.

According to the Easterlin hypothesis, the positive relationship between income and fertility is dependent on relative income. The hypothesis presumes that aspirations are significantly determined by family background. If income is high relative to aspirations, individuals will tend to have more children. The definition of variables as sibling differences controls family background and yields a measure of relative income. Analyzing the Kalamazoo Brothers sample in this fashion produces no evidence in support of the hypothesis.