Sibling Spillovers[Endowments at birth and parents’ investment in children]

It is notoriously difficult to identify peer effects within the family. Using administrative data on children from both Florida and Denmark, the paper examines the effects of having a disabled younger sibling. To address the identification challenge, the paper compares the differential effects for first- and second-born children in three-plus-child families, taking advantage of the fact that birth order influences the amount of time that a child spends in early childhood with their younger siblings, disabled or not. The paper finds evidence that, relative to the first born, the second child in a family is differentially affected when the third child is disabled.