Abstract: This paper examines the link between the female secondary school stipend program in Bangladesh, its effects on schooling of girls and the consequent impact on their younger siblings’ education. The stipend program, introduced nationwide in 1994, affected girls in rural areas who were of secondary school age (grades 6-10) in 1994 or later, but not boys of the same cohort. We examine the effect of educational attainment of older siblings on schooling outcomes of younger siblings. We also examine the role of the gender of older siblings on the schooling outcomes of younger siblings. We find that the education of older siblings has a positive effect on the schooling of younger siblings and that the effect is sometimes stronger on younger brothers than on younger sisters. After taking into account the endogeneity of education of older siblings, their gender composition generally has no effect on the schooling attainment of younger siblings. Thus, failing to control for this inter-sibling education externality and the endogeneity of education may result in a biased estimate of the effect of older siblings’ gender composition. The instrumental variable estimation, using stipend program eligibility as an instrument, suggests that younger siblings’ completed years of schooling would be increased by 0.06-0.22 years if the education of older siblings increased by one year. This implies a 2-7 per cent increase compared with their mean education. Our results suggest that school programs that benefit children’s education could bring both short- and long-term gains not only to the affected children directly, but also to their siblings indirectly.