Publication Title: Munich Personal RePEc Archive

Abstract: This paper analyzes the role that different household groups play in human capital formation, sectoral growth and income distribution in Rwanda. Using the 2006 SAM of Rwanda, the paper calculates accounting multipliers to characterize the transmission of economic influences stimulated by an exogenous income injection. The paper further explores macroeconomic implications of family size for human capital, sectoral growth and income distribution, drawing on the pathways identified by structural path analysis. The following two findings are noted. First, the smaller the number of children in an average family, the higher the investment in human capital of the children in that family, demonstrating the presence of quantity-quality trade-o§. In particular, the household group with 1-3 children tends to spend more for the improvement of education and health status of children than those household groups with more than 3 children. Second, an improvement in human capital leads to a significant increase in agricultural production and that households with 1-3 children act as an important intermediate pole transmitting the influence of human capital investment on agricultural production. In conclusion, promoting family planning programs in Rwanda thus seems to be a viable strategy for economic growth and poverty reduction, considering the current average family size of 5 children.