DP15032 Early Childhood Investments and the Quantity-Quality Trade-off
We integrate key insights from the early childhood literature into the quantity-quality model. In theory the adverse effect of shocks to family size diminishes with birth spacing for children already born and rises for newborn siblings. The effect on the older child therefore provides a credible proxy for the quantity-quality trade-off only at short spacing intervals. Using matched mother-child data from NLSY79, we find robust empirical support for this proposition. Cognitive scores of children already born drop following shocks to family size but only when siblings arrive at younger ages. Family resources also matter. The cognitive scores of children drop only in households in which the mother has below median AFQT score.