Abstract
This paper develops a theoretical model of the effects of family size and birth order on educational attainment and earnings. The parental utility maximization model allows the development of closed-form expressions for the within-family ratios of schooling and earnings. A reduced form demand function for each child's schooling and earnings also can be obtained. Each of these functions depends on the exogenous variables of the price of education divided by the price of parental consumption, parental income, the child's endowment, and the parameters of the utility and the production function. Application of this model to empirical data from the Twin and Adult Offspring Sample confirmed both birth order and family size effects for schooling even when parental age, income, education, and father's religion were controlled. The effects were larger for daughters than sons. The difference in educational attainment between 1st and 5th-born was 0.7 years for males and 1.4 years for females. Family size further reduces parental contribution to college education and encourages working, loans, and scholarships. The earnings data do not display birth order effects once family background and sibship size are controlled.
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