Birth order, family size and educational attainment

This paper investigates the effect of family size and birth order on educational attainment. An instrumental variables approach is used to identify the effect of family size. Instruments for the number of children are twins at last birth and the sex mix of the first two children. The effect of birth order is identified, by examining the relation with years of education for different family sizes separately. No significant effect of family size on educational attainment of the oldest child is found. Birth order has a significant negative effect. Potential mechanisms behind the birth order effects are investigated. The results show that birth order effects are not affected by the average age gap between children. Information on financial transfers shows that earlier born children have a higher probability of receiving money from their parents than later born children, also the amount they receive is higher. These results indicate that the allocation of parental resources is a potential mechanism behind the birth order effects.