All for One? Family Size and Children's Educational Distribution under Credit Constraints

This paper examines the possibility that a child's years of schooling could increase in the number of siblings, instead of being diminished by competition for parents' resources: if unable to finance the education of their younger children, parents may do so through their older children's labor income. We examine this possibility in a model combining convex returns to education and credit constraints. Our model predicts correlations among family size, years of schooling and birth order, which would not exist when either of these two elements is absent. Empirical patterns shown in the United States, Mexico, and South Korea support the model predictions.