The Australian National University Centre for Economic Policy Research DISCUSSION PAPER Birth Order Matters: The Effect of Family Size and Birth Order on Educational Attainment

We are grateful to Tim Hatton for very helpful discussions, to seminar participants at the Australian National University and Melbourne University for useful comments, and to Margi Wood and Jeta Vedi for data assistance. The data were made available through the UK Data Archive. The data were originally collected by the ESRC Research Centre on Micro-social Change at the University of Essex, now incorporated within the Institute for Social and Economic Research. Neither the original collectors of the data nor the Archive bear any responsibility for the analyses or interpretations presented here. We use unique retrospective family background data from the 2003 wave of the British Household Panel Survey to explore the degree to which family size and birth order affect a child’s subsequent educational attainment. Theory suggests a trade off between child quantity and ‘quality’. Family size might adversely affect the production of child quality within a family. A number of arguments also suggest that siblings are unlikely to receive equal shares of the resources devoted by parents to their children’s education. We construct a composite birth order index that effectively purges family size from birth order and use this to test if siblings are assigned equal shares in the family’s educational resources. We find that they are not, and that the shares are decreasing with birth order. Controlling for parental education, parental age at birth and family level attributes, we find that children from larger families have lower levels of education, that there is a separate negative birth order effect, and that the family size effect does not vanish once we control for birth order. Our findings are robust to a number of specification checks