Academic journal article Economic Inquiry

The Early Bird Gets the Worm? Birth Order Effects in a Dynamic Family Model

Academic journal article Economic Inquiry

The Early Bird Gets the Worm? Birth Order Effects in a Dynamic Family Model

Article excerpt

The great advantage of living in a large family is that early lesson of life's essential unfairness.

Nancy Mitford (http://www.quotegarden.com/ family.html)

I. INTRODUCTION

Birth order effects, well established in both the academic and the popular psychology literature, have received considerable attention in recent empirical economics studies. For example, Ejrnaes and Portner (2004), Black, Devereux, and Salvanes (2005), Conley and Glauber (2006), and Kantarevic and Mechoulan (2006) find significant differences between firstborn and later born children in outcomes--such as educational attainment and/or earnings; Price (2008) finds differences in inputs. In general, the firstborn in the family is advantaged. Hanushek (1992) suggests that these differences arise because children of different birth order within the same family are born into different intellectual environments, with later borns entering less stimulating environments. Price (2008) looks at quality time that parents spend with each child in multiple-child families and finds that children of higher birth order receive less quality time with parents, at any given age, than do children of lower birth order at the same age. Zajonc (1976) suggests that older siblings partly replace parents in providing some of this quality time; this benefits the firstborns because they have the opportunity to be teachers from an early age. Theoretical economic models of the family are typically atemporal when it comes to the decision of how much of the family's resources to devote to children, and hence, birth order effects do not emerge endogenously.

Our article fills an important gap in the theoretical literature on families with children by explicit consideration of the temporal production of both the child's well-being and its human capital and the influence of birth order on the production conditions for children who are close in age. We show cases in which the firstborn receives more resources overall than the second, so the second born never has higher utility than the firstborn at any stage (Proposition 1). In this case, we can make clear predictions about outcomes as well as inputs and we would expect tests to reveal higher scores of the firstborn regardless of the age at which they are administered. In other cases, the mix of resources devoted to children differs with birth order, with ambiguous predictions for outcomes at some ages (Propositions 2a and 3) or all ages (see, e.g., Propositions 2b and 5).

We investigate the trade-off parents make between spending time with children and working for income to purchase consumption goods for family members. We consider a three-stage model of parental decision making. A family has two children who are born sequentially. Older children have different needs than younger ones, so the sequential nature of child rearing matters. Each child spends two periods with their parents: the firstborn is a single child in its first period of life and an older sibling in its second and the second born is a younger sibling in its first period and the sole child in the household in its second. Thus, each child spends one period with parents and a sibling, and one period alone with its parents; the children differ with respect to the sequencing of these two phases.

In the second period, the presence of two children, of different ages and with different needs, but both requiring some supervision time, raises the issue of economies of scope in childcare. (1) Is a given amount of parental childcare as productive if shared by two children rather than devoted to one? There is little direct evidence on the nature of the home production function for child quality, but Mocan (1997) found evidence suggesting the existence of both scale and scope economies in the production functions for day care centers. In the main body of the article, we assume economies of scope for parents. (2)

Parents care about both the contemporaneous "utility" of each child and their well-being as adults; we assume no societal or personal biases in favor of either child. …

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