Oh Brother! Testing the Etiology of Sibling Effects Using External Cash Transfers

Siblings can slow child development, but distinguishing intrinsic from economic circumstances has been more difficult. The grants of the Oportunidades Mexican welfare program allo w us to test this linkage. We investigate whether transfers increase firstborn characteristics faster than other children’s characteristics, and whether the observed negative effects of being part of a larger set of siblings stem from having to share household resources. We find that firstborn children get larger physical and verbal benefits from transfers, but beha vioral improvements are less tied to cash than to program participation. Children in larger households seem resource constrained; there, transfers have larger impacts.