Birth Order and the Intrahousehold Allocation of Time and Education

Abstract

This paper develops a model of intrahousehold allocation with endogenous fertility, which captures the relationship between birth order and investment in children. It shows that a birth order effect in intrahousehold allocation can arise even without assumptions about parental preferences for specific birth order children or genetic endowments varying by birth order. The important contribution is that fertility is treated as endogenous, something which other models of intrahousehold allocation have ignored. The implications of the model are that children with higher birth orders, i.e. are born later, have an advantage over siblings with lower birth orders, who are born earlier, and that parents who are inequality averse will not have more than one child. The model furthermore shows that not taking account of the endogeneity of fertility when analysing intrahousehold allocation may seriously bias the results. The effects of a child's birth order on its human capital accumulation are analysed using a longitudinal data set from the Philippines that covers a very long period. We examine the effects of birth order on both number of hours in school during education and completed education. The results for both are consistent with the predictions of the model.