This paper implements a test of the Resource Dilution Hypothesis (RDH) stating that sibship size has a negative causal effect on educational attainment. Most existing studies using conventional methods support the RDH. This paper implements an Instrumental Variable (IV) approach to testing the claim of a negative causal relationship between sibship size and educational attainment. Analyzing data from the Wisconsin Longitudinal Study, the empirical analysis demonstrates, first, that conventional OLS regression estimates sibship size to have a negative effect on educational attainment equal to about one-tenth of a year of schooling per sibling. Second, when applying the IV method to account for potential endogeneity, the negative effect of sibship size increases substantially to about one-third of a year of schooling per sibling.
Mads Meier Jæger