Abstract
Using data from nationally representative household surveys, we test whether Indian parents make trade-offs between the number of children and investments in education. To address the endogeneity due to the joint determination of quantity and quality of children, we instrument family size with the gender of the first child, which is plausibly random. Given a strong son preference in India, parents tend to have more children if the firstborn is a girl. Our instrumental variable results show that children from larger families have lower educational attainment and are less likely to be enrolled in school, with larger effects for rural, poorer, and low-caste families as well as for families with illiterate mothers.
Highlights
High population growth has long been considered a potential deterrent for economic growth and development
Having an extra sibling in low-caste households reduces the likelihood of ever attending school by 3.6 percentage points, which is double what we found in Table 4 for the full sample
By contrast, growing up with an extra sibling reduces the likelihood of being currently enrolled by between 0.006 and 0.019 for children in low- and middle-caste households, the effects on low-caste households are not statistically significant in this case. These results suggest that family size has a more negative impact on lower-caste families that cannot overcome educational and liquidity constraints
Summary
High population growth has long been considered a potential deterrent for economic growth and development. Family size and human capital are negatively correlated: a larger family has fewer resources to devote to each child’s education. Omitted variable bias of this type will tend to exaggerate the negative relation between family size and human capital investments. To address this concern, we employ an instrumental variable (IV) method and use gender of the first child to instrument family size. The impact of having an extra child in terms of reducing enrollment and attendance roughly doubles, and the impact of having an extra child on years of schooling increases approximately threefold for illiterate and poor mothers, suggesting much larger gains from reducing family size in disadvantaged households
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