Fertility, birth gap between siblings and parental investments, evidence from the two-child policy in China

Family size and birth gap between siblings are important determinants of the allocation of household resources. However, the effect of the birth gap on parental investment is less investigated. In this thesis, I exploit the universal two-child policy (TCP) in China as an instrument variable for the birth of a second child and the birth gap and evaluate the immediate response to the policy. I first examine the effect of the birth of a second child on parental educational investment and time spent on the first child. Conditional on having a second child, I further investigate the effect of the birth gaps on parental investments for both older and younger siblings. For the first child, I find that the birth of a second child has no significant effect on the educational investment and maternal time, but it will reduce the parental time from the father. I also find that a larger birth gap is associated with more educational investment and more maternal time, but no evidence for paternal time. The IV results of the effects of the birth gap on educational investment in the first child are larger than the OLS estimates. For the second child, the birth gap is not associated with educational investment and maternal time. However, it is positively associated with paternal time. Moreover, the first children above the age of seven will receive less educational investment than those below the age of seven.