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

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.