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Household production, full consumption and the costs of children

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  • Apps, Patricia
  • Rees, Ray

Abstract

Recent work criticises both the logic and relevance of the theoretical basis of the approach to estimating the costs of raising children adopted in much of the economics literature. This tends to be restricted purely to models in which the household members consume market goods with given household income. The "costs of children" are perceived essentially as market consumption costs. This ignores the fact that an important, possibly preponderant element of child costs takes the form of parental time, which must be diverted from alternative uses such as market work, other house-hold production activities and leisure, to care for children. The studies also ignore the question of the distribution of income among adults and, in particular, the differential incidence of child costs on adult members of the household. In this paper we first of all argue that a satisfactory theoretical approach to modelling child costs must simultaneously incorporate an "individualistic" formulation of the household (as in Apps and Rees, 1988, 99) and a formal treatment of household production (as suggested by Becker 1965, and adapted in Apps and Rees, 1988, 99). We then provide such a model. Using data from a recent Time Use Survey, we estimate specialized versions of the model for families with two children and use the results to derive the intra-family distribution of resources and implied child-rearing costs.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 8 (2001)
Issue (Month): 6 (December)
Pages: 621-648

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Handle: RePEc:eee:labeco:v:8:y:2001:i:6:p:621-648

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  1. Patricia Apps & Ray Rees, 2001. "Household Saving and Full Consumpyion Over the Life Cycle," CEPR Discussion Papers 428, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  2. Apps, Patricia F & Rees, Ray, 1997. "Collective Labor Supply and Household Production," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 178-90, February.
  3. Joshua D. Angrist & Alan B. Krueger, 1990. "The Effect of Age at School Entry on Educational Attainment: An Application of Instrumental Variables with Moments from Two Samples," NBER Working Papers 3571, National Bureau of Economic Research, Inc.
  4. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-75, September.
  5. Lanjouw, Peter & Ravallion, Martin & DEC, 1994. "Poverty and household size," Policy Research Working Paper Series 1332, The World Bank.
  6. Apps, P.F. & Rees, R., 1998. "On the Taxation of Trade Within and Between Households," Papers 337, Australian National University - Department of Economics.
  7. M Arellano & Costas Megir & Mary Silles, 1990. "Female Labour Supply and On-the-Job Search: An Empirical Model Estimated using Complementary Data Sets," CEP Discussion Papers dp0009, Centre for Economic Performance, LSE.
  8. Cigno, Alessandro & Luporini, Annalisa & Pettini, Anna, 2003. "Transfers to families with children as a principal-agent problem," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1165-1177, May.
  9. Praag, B.M.S. van & Kapteyn, A.J., 1976. "A new approach to the construction of family equivalence scales," Open Access publications from Tilburg University urn:nbn:nl:ui:12-361896, Tilburg University.
  10. Gronau, Reuben, 1991. "The Intrafamily Allocation of Goods--How to Separate the Adult from the Child," Journal of Labor Economics, University of Chicago Press, vol. 9(3), pages 207-35, July.
  11. Ugo Colombino, 2000. "The Cost of Children When Children are a Choice," LABOUR, CEIS, vol. 14(1), pages 79-95, 03.
  12. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, vol. 9(4), pages 505-518, November.
  13. Rees, Ray, 1988. "Taxation and the Household," Munich Reprints in Economics 3411, University of Munich, Department of Economics.
  14. Nelson, Julie A, 1993. "Household Equivalence Scales: Theory versus Policy?," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 471-93, July.
  15. Pollak, Robert A & Wales, Terence J, 1979. "Welfare Comparisons and Equivalence Scales," American Economic Review, American Economic Association, vol. 69(2), pages 216-21, May.
  16. FranÚois Bourguignon, 1999. "The cost of children: May the collective approach to household behavior help?," Journal of Population Economics, Springer, vol. 12(4), pages 503-521.
  17. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
  18. Gustafsson, Bjorn & Kjulin, Urban, 1994. "Time Use in Child Care and Housework and the Total Cost of Children," Journal of Population Economics, Springer, vol. 7(3), pages 287-306, July.
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