Birth order effects on human capital development of children in Ecuador

Monique de Haan
Erik Plug
José Rosero
In this paper we investigate birth order effects on human capital development of children in Ecuador.
Specifically, we estimate the relationship between birth order, preschool cognition and secondary
school enrollment using family fixed effects estimation to rule out that observed differences in birth order are driven by family size or any other omitted family factor that is shared among siblings. In addition, we explore possible pathways that predict the birth order patterns we observe; in particular, we look for parental treatment differentials and test whether the amount of time mothers allocate to various types of child care depends on birth order. We have at our disposal two data sources. The data we use to examine the effect of birth order on child schooling and child labor are taken from the SELBEN database which covers almost all poor families in Ecuador at some point during 2001 and 2006. The data we use to examine the effect of birth order on preschool cognition come from a recent survey we held in Ecuador between 2008 and 2010 among a selective sample of poor families with children eligible for early child development programs. Cognitive test scores were taken from children up to 6 years old. Of relevance to our study, mothers were asked questions about, among others, the amount of time spent with each child on a particular day at particular activities. In this paper we find that child schooling increases with birth order, while child labor decreases with birth order. These birth order estimates are substantial and insensitive to omitted characteristics that children within families share. Similar birth order patterns are also observed much earlier in life; we find positive effects of birth order on various measures of preschool cognition. When we consider the time mothers spend with their children as possible driver behind these birth order patterns, we find that later born children receive more childcare time than earlier born children. In particular, later born children receive much more cognitive childcare time (which includes playing, drawing, talking and reading stories or books). They are also breastfed longer. Our findings are consistent with models where time investment in children early on in life is important to the further development of human capital (Becker, 1965; Cunha et al., 2006; Almond and Currie, 2011). Since the birth order results we find are opposite to what is commonly found in the western 2 world (Björklund and Salvanes, 2011), we tentatively conclude that the negative relationship between birth order and human capital may not hold in the context of a developing country. We do not provide any causal evidence on why this is, but speculate about related explanations that are more common to developing countries: high poverty rates, low levels of parental education and high teenage pregnancy rates. When we look at preschool cognition, we do not find much when we estimate birth order effects on stratified samples. But when we look at school and work outcomes of children in their teens, we find the largest birth order effects in poor and lower educated families. In fact, birth order effects appear slightly negative for teenage children growing up in richer families, having higher educated parents. Poverty (and the absence thereof) seems to be a likely driver behind the birth order divide between developing and developed countries. The paper continues as follows. Section 2 provides some empirical and theoretical background on the relationship between birth order, cognitive development and child schooling. Section 3 shortly describes Ecuador and the data we have collected there. After introducing the empirical fixed effects strategy in Section 4, Section 5 presents our main birth order estimates for child cognition, child schooling and child labor. In Section 6 we investigate potential explanations for our positive birth order estimates and finally Section 7 presents conclusions. Read Article