Children's Socio-Emotional Skills: Is there a Quantity-Quality Trade-off?

Although it is widely acknowledged that non-cognitive skills matter for adult outcomes,
little is known about the role played by family environment in the formation of these skills.
We use a longitudinal survey of children born in the UK in 2000-2001, the Millennium
Cohort Study by the Centre for Longitudinal Studies, to estimate the effect of family
size on socio-emotional skills, measured by the Strengths and Difficulties Questionnaire.
To account for the endogeneity of fertility decisions, we use a well-known instrumental
approach that exploits parents' preference for children's gender diversity. We show that
the birth of a third child negatively affects the socio-emotional skills of the first two
children in a persistent manner. However, we show that this negative effect is entirely
driven by girls. We provide evidence that this gender effect is partly driven by an unequal
response of parents' time investment in favour of boys and, to a lesser extent, by an
unequal demand for household chores.