The quality-quantity trade-off among Australian children

Abstract

There is a lack of consistent empirical evidence to support an adverse effect on child outcomes with increasing family size, popularly known as the quality-quantity trade-off. The finding of a negative ‘average’ effect of family size indicates that the dilution of parental inputs and resources leads to worsening child quality. We investigate the effect of additional children across the distribution of child outcomes using quantile treatment effects, as parental investment could arguably be heterogeneous. Identification is achieved through two well-known instruments; we obtain upper bounds using multiple birth status of the child, as well as more conservative estimates using a sex composition instrument. We find that the trade-off exists for four different measures of cognitive development and health among Australian children, and affects all children irrespective of their position in the outcome distribution. Our findings are of particular relevance in light of the Australian government’s policy focus on boosting fertility.