Explaining the Birth Order Effect: The Role of Prenatal and Early Childhood Investments

The critical role of prenatal and early childhood conditions on adult outcomes has been the focus of a rich body of research. In this paper, we examine various preand postnatal investments as possible sources behind the “birth order effect” – significant differences in the educational and labor market outcomes across children of varying birth orders. Taking advantage of a rich set of information on in utero and early childhood conditions in the Children of the NLSY79, we find that, within the same household, siblings of higher birth order experience a lower reduction in cigarette usage during pregnancy, are breastfed less often, and experience less cognitive stimulation and emotional support at ages 0 to 1. Next, we test for the presence of birth order effects in early cognitive and non-cognitive test scores and examine whether these differences can be explained by variations in prenatal and early childhood investments. Although there exists a significant negative relationship between birth order and early cognitive/non-cognitive test scores, the size and the significance of the negative birth order effects in test scores and educational attainment are robust to controlling for variations in early childhood factors. ∗We are grateful to Andy Zuppann and Chinhui Juhn for their helpful comments and suggestions. Any remaining errors are our own. †Department of Economics, University of Houston. E-mail: [email protected] ‡IEB, Universitat de Barcelona. E-mail: [email protected] §University of New South Wales & IZA. E-mail: [email protected]