Dynamic Complementarity in Skill Production: Evidence From Genetic Endowments and Birth Order

Tinbergen Institute Discussion Paper 2020-082/V

48 Pages Posted: 4 Jan 2021 Last revised: 7 Jan 2021

See all articles by Dilnoza Muslimova

Dilnoza Muslimova

Erasmus University Rotterdam (EUR)

Hans van Kippersluis

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Cornelius A. Rietveld

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Stephanie von Hinke

University of Bristol; Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Fleur Meddens

Erasmus University Rotterdam (EUR)

Date Written: December 14, 2020

Abstract

The birth order literature emphasizes the role of parental investments in explaining why firstborns have higher human capital outcomes than their laterborn siblings. We use birth order as a proxy for investments and interact it with genetic endowments. Exploiting only within-family variation in both ensures they are exogenous as well as orthogonal to each other. As such, our setting is informative about the existence of dynamic complementarity in skill production. Our empirical analysis exploits data from 15,019 full siblings in the UK Biobank. We adopt a family-fixed effects strategy combined with instrumental variables to deal with endogeneity issues arising from omitted variables and measurement error. We find that birth order and genetic endowments interact: those with above-average genetic endowments benefit disproportionally more from being firstborn compared to those with below-average genetic endowments. This finding is a clean example of how genetic endowments ('nature’) and the environment ('nurture’) interact in producing educational attainment. Moreover, our results are consistent with the existence of dynamic complementarity in skill formation: additional parental investments associated with being firstborn are more ‘effective’ for those siblings who randomly inherited higher genetic endowments for educational attainment.

Keywords: birth order, dynamic complementarity, gene-environment interaction, educational attainment, polygenic score

JEL Classification: D15, I24, J24

Suggested Citation

Muslimova, Dilnoza and van Kippersluis, Hans and Rietveld, Cornelius A. and von Hinke, Stephanie and Meddens, Fleur, Dynamic Complementarity in Skill Production: Evidence From Genetic Endowments and Birth Order (December 14, 2020). Tinbergen Institute Discussion Paper 2020-082/V, Available at SSRN: https://ssrn.com/abstract=3748468 or http://dx.doi.org/10.2139/ssrn.3748468

Dilnoza Muslimova (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Hans Van Kippersluis

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

Burg. Oudlaan 50
Rotterdam, NL 3062 PA
Netherlands

Cornelius A. Rietveld

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Stephanie Von Hinke

University of Bristol

University of Bristol,
Senate House, Tyndall Avenue
Bristol, Avon BS8 ITH
United Kingdom

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Fleur Meddens

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

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