Birth Spacing and Sibling Inequality: Asymmetric Information within the Family

Abstract

This paper formulates a dynamic model of birth spacing incorporating uncertainty about (and heterogeneity in) birth outcomes and joint production to assess how the spacing of children responds to exogenous shocks in birth outcomes. Estimation technics are developed that use assumptions about the constraints on the information available to parental decision-makers associated with the sequential nature of childbearing ignored in static models of intra-household behavior. Section 1 examines the technology of birth spacing and its consequences for the level and distribution of child outcomes and resources. In section 2 the model compares alternative estimation technics. In section 3 data from a probability sample of US white married couples are used to describe intrafamily variation in birth outcomes and spacing and to test for heterogeneity bias. The results in section 4 suggest that across-family heterogeneity bias may be less important than within-family heterogeneity bias in estimates of the effects of birth order and timing patterns of births on health. Results from family fixed effect of sibling models of child quality determination that ignore intrafamily substitution may be misleading. Section 5 estimates how birth outcome endowments and information on gender are used to estimate how differences in them affect subsequent birth timing decisions and sibling inequality. Results suggest that 1) the birth of 1st born children tends to be delayed among families with high-income husbands highly educated parents superior health endowment or high tastes for health investments; 2) the proximity of the birth of the 2nd child to that of the 1st child is a positive function of the quality of the 1st born and 3) the spacing and existence of a 3rd child is significantly related to the birth outcomes sex composition and sex ordering of the 1st and 2nd children.