Göteborg Papers in Economic History,
University of Gothenburg, Unit for Economic History

Abstract: Instrumental variables based on twin births are a well-known and widespread method to find exogenous variation in the number of children when studying the effect on siblings or parents. This paper argues that there are serious problems with all versions of these instruments. Many of these problems have arisen because insufficient care has been given to defining the estimated causal effect. This paper discusses this definition and then applies the potential outcomes framework to reveal that instrumental variables based on twin birth violate the exclusion restriction, the independence assumption and one part of the stable unit treatment value assumption. These violations as well as the characteristics of the populations studied have contributed to hiding any true effect of the number of children. It is time to stop using these instrumental variables and to return to these important questions using other methods.

Keywords: causal inference; natural experiments; local average treatment effect; complier average causal effect; Rubin’s causal model; quantity–quality trade-off; family size

JEL-codes: C21; C26; J13

58 pages, April 1, 2018

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