It is well established that a negative exogenous shock during the early stage of one’s life can have significant short-term and long-term impacts on health and education outcomes (Almond et al., 2009; Almond and Currie, 2011; Currie and Vogl, 2013; Leon, 2012; Neelsen and Stratmann, 2011). However, existing literature has largely ignored the effect of an older child’s exposure to a natural disaster on economic outcomes of younger siblings born after the incidence of the event. The spillover effects of a negative shock can exist for several reasons. First, changes of family circumstances can influence younger sibling’s psychological well-being and overall development (Newman et al., 1997; Renner, 2012). Second, previous studies have shown the existence of peer effects within the family, mainly because older siblings have a significant influence on their younger siblings through teaching, interaction, or educational aspiration (Black et al., 2021; Nicoletti and Rabe, 2019). Lastly, older children in a developing country tend to attend a lower level of education because of lack of financial resources, low-educated parents, and teenage motherhood (Haan et al., 2014). If natural disasters such as earthquakes exacerbate the impact of birth order on intra-household investments, the impact on younger sibling’s human capital can be larger in magnitude through the peer effect in the family. Older child’s exposure to a negative shock, therefore, can have a negative externality on younger sibling’s educational outcomes. This chapter evaluates the impact of an older child’s exposure to the 1988 earthquake on the educational attainment of younger siblings born between three and seven years after the earthquake took place in Nepal. The earthquake on August 21, 1988, with a 6.7 degree on the Richter scale, killed 721 people, demolished over 105,000 buildings in 33 districts and affected almost half a million people (Paudel and Ryu, 2018). In this article, we take advantage of plausibly exogenous seismic intensity of a large earthquake and employ difference-in-differences (DID) research design to evaluate the indirect impact of the natural disaster on human capital accumulation of younger siblings of earthquake-affected infants. Using different waves of rich nationwide household survey in Nepal, we employ two specific control groups