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The Early Bird gets the Worm? Birth Order Effects in a Dynamic Model of the Family

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Abstract

Birth order effects are found in empirical work, but lack theoretical foundations. Our new approach to modelling children provides this. Each child has the same genetic make-up and parents do not favour a child based on its birth order. Each child’s needs change as it grows, and births are sequential. At any point in time siblings are at different developmental stages, and the benefits of parental investment differ across these stages. Parental time investment in children lowers current and future wages; this opportunity cost varies across time. Birth order effects emerge from the interaction of the changing benefits and costs of parental investment.

Suggested Citation

  • Elisabeth Gugl & Linda Welling, 2007. "The Early Bird gets the Worm? Birth Order Effects in a Dynamic Model of the Family," Department Discussion Papers 0710, Department of Economics, University of Victoria.
  • Handle: RePEc:vic:vicddp:0710
    Note: ISSN 1914-2838
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    Keywords

    Birth order; children; family;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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