Same, but Different? Birth Order, Family Size, and Sibling Sex Composition Effects in Entrepreneurship

How does family background affect entrepreneurship? Beyond exposing siblings to common features such as human capital and financial resources, the family context also generates sibling differences. In this paper, I assess the differential effects of birth order, family size, and sibling sex composition on unincorporated and incorporated entrepreneurship in a set of causal exercises using Swedish register data. First, while later born men are more likely to become unincorporated entrepreneurs, this effect is explained by their lower education and poorer labor market prospects, pointing towards the subsistence nature of this type of entrepreneurship. Second, I find limited evidence of causal family size effects in linear and non-linear instrumental variable approaches. Third, while I find no pure sibling sex composition effect, there is a small negative effect of having a brother on the father-daughter association in unincorporated entrepreneurship. Fourth, neither source of within-family heterogeneity exhibits a clear relationship with incorporation, although children with more than four siblings are less likely to become incorporated business owners. Finally, accounting for within-family differences increases previously estimated sibling correlations by little. The results confirm the role of families in generating sibling similarities, rather than differences in entrepreneurship.