Unobserved Ability, Efficiency Wages, and Interindustry Wage Differentials

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Abstract
This paper documents the impact of siblings on the education of men and women born in the United States between 1920 and 1965. We examine the effect of the number and sex composition of a boy or girl's siblings on that child's educational attainment. We find that throughout the century women's educational choices have been systematically affected by the sex composition of her siblings, and that men's choices have not. Women raised only with brothers have received on average significantly more education than women raised with any sisters, controlling for household size. Since sibling sex composition affects women's educational attainment and plausibly may be unrelated to other determinants of earnings, it may provide a useful instrument for education in earnings functions for women. Our results suggest that standard estimates significantly underestimate the return to schooling for women.

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