Birth order, gender, and the parental investment gap among children

Using panel data from the Longitudinal Survey of Newborns in the 21st Century (21 seiki shusshoji judan chosa) conducted by the Japanese Ministry of Health, Labor and Welfare, the purpose of this paper is to examine whether birth order and gender matter when parents make financial investments in their children. Rather than examining the effects of birth order and the number of siblings on the outcomes of children such as educational attainment, academic achievement and health status, this paper focuses on the actual investment in the children in the form of financial resources. In order to account for the endogeneity of family size, we use as a random effect instrumental variable estimator to estimate the models for parental investment in children. It is found that in Japan, parents spend more money on: their first born child, their male children when they are young, and their female children when they are old. In contrast, parents' spending on educational related activities outside of regular schools is higher for boys, but there is no difference between first born and later born children. Spending on extracurricular activities is higher for girls and for first born children. Interestingly, girls receive more pocket money than boys, whereas a first born child receives less pocket money compared to a higher order child of the same age. Suggested reasons to explain some of these findings include for example, the existence of gender dependent and gender independent durable and semi-durable goods, and the prices of goods that are gender-specific.