Previous studies in Western developed societies suggest that the higher one’s birth order is, the less education he or she receives, which lends support to the family resource dilution theory. However, in many East Asian societies, it has been reported repeatedly that the ordinal position of birth is positively correlated with educational attainment. The discrepancy between empirical findings in the West and in the East can probably be due to two reasons: (1) Intrahousehold resource transfer from older children, especially older daughters, to younger children, that is, inter-sibling resource transfer, often happens within East Asian families; and/or (2) Previous studies conducted in East Asian societies fail to consider and resolve the serious endogeneity problem that has plague...[ Read more ]

Previous studies in Western developed societies suggest that the higher one’s birth order is, the less education he or she receives, which lends support to the family resource dilution theory. However, in many East Asian societies, it has been reported repeatedly that the ordinal position of birth is positively correlated with educational attainment. The discrepancy between empirical findings in the West and in the East can probably be due to two reasons: (1) Intrahousehold resource transfer from older children, especially older daughters, to younger children, that is, inter-sibling resource transfer, often happens within East Asian families; and/or (2) Previous studies conducted in East Asian societies fail to consider and resolve the serious endogeneity problem that has plagued all works. By overcoming both theoretical and statistical limitations, this study reexamines the effect of birth order on educational attainment in the context of Taiwan. Results from the sibling fixed effects model demonstrate unequivocally that after inter-sibling resource transfer has been properly controlled, the effect of birth order on educational achievement has become significantly negative. This lends strong support that both parent-child resource transfer and inter-sibling resource transfer play independent roles in determining individual educational attainment. Furthermore, the study also finds that the birth order effect is heterogeneous among different social groups and birth cohorts.