EARLY-CHILDHOOD NUTRITION, SCHOOLING, AND SIBLING INEQUALITY 71
dren is exogenous; it is uncorrelated with shocks in schooling decisions and outcomes, an assumption which justifies the inclusion of age fixed effects.7
Second, since it is highly likely that household-specific unobservables µi are correlated with hijt–1, OLS estimates of β1 are biased. This makes it neces- sary to eliminate this component from the errors. For this purpose, I include
household fixed effects to control µi. Therefore, the estimation is based on variations across siblings in the household (that is, within-sibling estimates).
In the context of panel analysis, the inclusion of household fixed effects has another advantage regarding the attrition bias. Since we look only at within-household variations, given household observations in the two rounds, we do not have to control for household-level attrition problems. Individual- level attritions are investigated in the section “Data Sources” (see Table 4.3). With household fixed effects, however, we use only within-household variations from the sample of multiple-child households. Dropping observa- tions from single-child households reduces the size of our sample, which potentially decreases the precision of parameter estimates in our analysis. Third, even with household fixed effects, we still encounter a potential
problem of bias that may arise from a correlation between φj and hijt. To eliminate this correlation, it is necessary to use a set of instruments that
explains the variations in hijt–1 but is uncorrelated with either φj or shocks in schooling investments and outcomes εijt. However, the necessity depends on the magnitude of covariations in differences among siblings in the z-score and schooling endowments.
For this purpose, we use the information on whether each community (cluster) had different types of healthcare personnel—doctor, nurse, pharma- cist, trained midwife, family planning worker, community healthcare worker, or traditional birth attendant—in t – 2 (1993 in our setting), interacted by child age.8 The 1993 initial condition of healthcare personnel availability should
7 Since we only use preschool children in the sample, we can exclude the possibility that par- ents observe the schooling outcomes of older children before making reproductive (childbirth) decisions. However, as discussed, it is still possible that the health outcomes of older children
in the preschool period affect reproductive decisions. 8 The data include information on the distance from the community to the nearest personnel if the community has no personnel. The data also have information on types of healthcare facili- ties in the community, number of healthcare facilities, and if they do not exist, distance to the nearest one. In this chapter, however, we use only the indicator of whether communities had those personnel.
In an early version, an instrument was constructed as follows. First, define the indicator, which has the value of one if children were less than 3 years old (inclusive) between the begin- ning of 1994 and the end of 1995. The period before the age of 3 is regarded as that when a child’s growth is most sensitive to nutritional intake, which reflects economic conditions. This indicator is interacted with cluster fixed effects to capture possible heterogeneity in the impacts of the 1994–95 disturbances on child growth, I(Age 3 in year = 1994 or 1995) × cluster
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