Education, Birth Order, and Family Size
We introduce a general framework to analyze the trade-off between education and family size. Our framework incorporates parental preferences for birth order and delivers theoretically consistent birth order and family size effects on children's educational attainment. We develop an empirical strategy to identify these effects. We show that the coefficient on family size in a regression of educational attainment on birth order and family size does not identify the family size effect as defined within our framework, even when the endogeneity of both birth order and family size are properly accounted for. Using Danish administrative data we test the theoretical implications of the model. The data does not reject our theory. We find significant birth order and family size effects in individuals' years of education thereby confirming the presence of a quantity-quality trade off.
Earlier versions of this paper were presented at Royal Holloway, Catholic University of Chile and University of Maryland. We benefited from helpful comments by participants at the seminars and also from valuable comments by Sandra Black, Paul Devereux, Jessica Goldberg, and Kjell Salvanes. Jesper Bagger gratefully acknowledges financial support from The Cycles, Adjustment, and Policy research unit, CAP, Department of Economics and Business, Aarhus University. Sergio Urzua appreciates the support of Centro de Microdatos at the University of Chile through the Millennium Science Initiative sponsored by the Chilean Ministry of Economics, Development and Tourism, Project NS100041. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.