Within‐family inequalities in human capital accumulation in India

• Published date: 01 February 2023
• Author: Heather Congdon Fors,Annika Lindskog
• Date: 01 February 2023
• DOI: http://doi.org/10.1111/rode.12929

REGULAR ARTICLE

Within-family inequalities in human capital

accumulation in India

Heather Congdon Fors | Annika Lindskog

School of Economics, Business and Law,

University of Gothenburg, Gothenburg,

Sweden

Correspondence

Annika Lindskog, Department of

Economics, School of Economics,

Business and Law, Box 640, 405 30

Göteborg, Sweden.

Email: annika.lindskog@economics.gu.se

Funding information

Swedish Research Council, Grant/Award

Number: 2014-05963

Abstract

We investigate within-family inequalities in human

capital accumulation in India. Indicators of the

children's current stock of human capital and of

investment into their continued human capital accu-

mulation are analyzed, distinguishing between time

investments and pecuniary investment into school

quality. We employ a within-family model using

sibship fixed effects, and find mostly negative birth

order effects; that is, earlier-born children are better

off. However, for time investments there is a ten-

dency toward more positive birth order effects, espe-

cially in poor and large families. This suggests that

that opportunity cost of child time matters; in poor

and large families the older, more productive, sib-

lings often need to work. The most plausible explana-

tion for negative birth order effects in general is

resource dilution at an early age. Older siblings were

only children at an early age, and therefore benefited

from more parental resources.

KEYWORDS

birth order, education, human capital, India

JEL CLASSIFICATION

D13, I20, O15

Received: 11 February 2021 Revised: 26 October 2021 Accepted: 20 July 2022

DOI: 10.1111/rode.12929

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distrib ution and

reproduction in any medium, provided the original work is properly cited.

© 2022 The Authors. Review of Development Economics published by John Wiley & Sons Ltd.

Rev Dev Econ. 2023;27:3–28. wileyonlinelibrary.com/journal/rode 3

1|INTRODUCTION

Human capital formation has long been considered a central component in explaining eco-

nomic development and economic inequalities. Much of the early research on human capi-

tal formation tended to emphasize the household as the primary unit of analysis and

focused on differences among households to explain variations in outcomes. More recently,

however, within-household inequalities in human capital formation have gained greater

attention. One aspect of within-household inequality that has proven significant is birth

order, as educational outcomes have repeatedly been shown to differ systematically along

this dimension.

There is an extensive literature showing negative birth order effects on human capital in

developed countries; that is, first-born siblings fare best. While final school attainment has been

the most common outcome, this relationship holds for a wide range of education-related out-

comes (Black et al., 2005; Booth & Kee, 2009; Conley & Glauber, 2006; De Haan, 2010;Hotz&

Pantano, 2015; Kantarevic & Mechoulan, 2006; Silles, 2010). Though there is an ongoing debate

about the explanation behind this negative relationship, it seems to be related to resource dilu-

tion at young ages in some form. As family size increases, there will be less, for example, paren-

tal time per child (Downey, 2001).

There has been less investigation into the effect of birth order on educational outcomes in

developing countries. The most common indicators studied have been school enrollment, child

labor, and completed grades, and the existing literature has found mostly positive birth order

effects (Dammert, 2010; De Haan et al., 2014; Ejrnæs & Pörtner, 2004; Lindskog, 2013;

Tenikue & Verheyden, 2010; Zeng et al., 2012).

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One hypothesis is that credit constraints can

explain this positive relationship. Families facing a credit constraint may be more likely to have

their early-born children participate in labor or child care and less likely to have these children

participate in education (Lafortune & Lee, 2014; Tenikue & Verheyden, 2010). Later-born

children thus benefit from the extra income generated by their older siblings.

In this study, we investigate birth order effects on the development of children's human cap-

ital in India. Our data on education inputs and outcomes are unusually rich, allowing us to

investigate both indicators of the children's current stock of human capital and of investment

into their continued human capital accumulation. We can further distinguish between time

investments and pecuniary investment into school quality. We also examine the impact of birth

order on child labor. While not an educational variable per se, child labor is relevant in under-

standing educational human capital accumulation. It is also an important variable in the earlier

literature from low- and middle-income countries.

There are three previous studies of birth order effects on education outcomes in India,

which come to conflicting conclusions. Kumar (2016) finds positive birth order effects on enroll-

ment, a time investment, and on years of schooling, while Makino (2018) finds negative birth

order effects on human capital stock, measured by test scores, for boys and no birth order

effects for girls. Kaul (2018) investigates the impact of being the first-born son on enrollment

and education expenses, and finds that the first-born son has an advantage. However, she does

not consider additional birth orders. A related paper is Jayachandran and Pande (2017), who

investigate how preferences favoring eldest sons create negative birth order effects on early-life

health outcomes. Compared to these earlier studies we use a much broader set of education out-

comes. Further, our data allow us to use a within-family specification that controls for birth

order effects among siblings of all birth orders, something that has not been done in the previ-

ous studies on India.

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4FORS AND LINDSKOG