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Household Production, Full Consumption and the Costs of Children

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Author Info
Apps, Patricia () (Faculty of Law, University of Sydney, and Economics, RSSS, Australian National University and IZA, Bonn)
Rees, Ray (Public Finance Institute, University of Munich)

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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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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 157.

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Length: 40 pages
Date of creation: May 2000
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Handle: RePEc:iza:izadps:dp157

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Related research
Keywords: Child costs; time allocation; household production;

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Find related papers by JEL classification:
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April. [Downloadable!] (restricted)
  2. 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. [Downloadable!] (restricted)
  3. Kapteyn, Arie & Van Praag, Bernard, 1978. "A new approach to the construction of family equivalence scales," European Economic Review, Elsevier, vol. 7(4), pages 313-335, May. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
    Other versions:
  5. Arellano, Manuel & Meghir, Costas, 1992. "Female Labour Supply and On-the-Job Search: An Empirical Model Estimated Using Complementary Data Sets," Review of Economic Studies, Blackwell Publishing, vol. 59(3), pages 537-59, July. [Downloadable!] (restricted)
    Other versions:
  6. 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. [Downloadable!] (restricted)
  7. Apps, Patricia F. & Rees, Ray, 1997. "On the Taxation of Trade Within and Between Households," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich.
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  8. 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.
    Other versions:
  9. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-75, September. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. You, Wen & Davis, George C. & Nayga, Rodolfo M., Jr. & McIntosh, Alex, 2005. "Parental Time and Children's Obesity Measures," 2005 Annual meeting, July 24-27, Providence, RI 19386, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  2. David Johnson & Guyonne Kalb, 2002. "Economic Analyses of Families: Existing Research Findings," Melbourne Institute Working Paper Series wp2002n27, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  3. Wendt, Minh, 2008. "Economic, Environmental, and Endowment Effects on Childhood Obesity," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6571, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  4. Robert Breunig & Deborah A. Cobb-Clark & Xiaodong Gong, 2005. "Improving the Modeling of Couples' Labour Supply," IZA Discussion Papers 1773, Institute for the Study of Labor (IZA). [Downloadable!]
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  5. Apps, Patricia / Rees, Ray, 2007. "Household Models: An Historical Perspective," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  6. Lyn Craig, 2006. "Where Do They Find the Time?: An Analysis of How Parents Shift and Squeeze Their Time around Work and Child Care," Economics Working Paper Archive wp_439, Levy Economics Institute, The. [Downloadable!]
  7. Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005. "Non-Market Time and Household Well-Being," Vienna Economics Papers 0507, University of Vienna, Department of Economics. [Downloadable!]
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  8. Mauro Mastrogiacomo & Nicole Voskuilen-Bosch, 2006. "Income incentives to labour participation and home production; the contribution of the tax credits in the Netherlands," CPB Discussion Papers 59, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  9. Steve Dowrick, 2004. "Ideas and Education: Level or Growth Effects and Their Implications for Australia," NBER Chapters, in: Growth and Productivity in East Asia, NBER-East Asia Seminar on Economics, Volume 13, pages 9-40 National Bureau of Economic Research, Inc. [Downloadable!]
  10. Fernanda de Castro & Walter Belluzo Júnior, 2006. "Alocação Intrafamiliar Do Consumo E Custo Criança: Um Estudo Aplicado Ao Brasil," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 171, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  11. José Ignacio Giménez & Miriam Marcén & José Alberto Molina, 2007. "How Does the Presence of Children Affect Dependent Care? A Psycho-Economic Approach," IZA Discussion Papers 2726, Institute for the Study of Labor (IZA). [Downloadable!]
  12. Shelly Lundberg, 2005. "The Division of Labor by New Parents: Does Child Gender Matter?," IZA Discussion Papers 1787, Institute for the Study of Labor (IZA). [Downloadable!]
  13. Steve Dowrick, 2003. "Ideas and Education: Level or Growth Effects?," NBER Working Papers 9709, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2006. "Non-Market Household Time and the cost of Children," Vienna Economics Papers 0606, University of Vienna, Department of Economics. [Downloadable!]
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  15. Patricia Apps, 2003. "Gender, Time Use and Models of the Household," CEPR Discussion Papers 464, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
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  16. Patricia Apps, 2009. "Tax Reform, Targeting and the Tax Burden on Women," CEPR Discussion Papers 609, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
  17. Jean Kimmel & Rachel Connelly, 2006. "Is Mothers' Time With Their Children Home Production or Leisure?," IZA Discussion Papers 2058, Institute for the Study of Labor (IZA). [Downloadable!]
  18. Patricia Apps & Ray Rees, 2004. "Life Cycle Time Allocation and Saving in an Imperfect Capital Market," CEPR Discussion Papers 475, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
  19. Patricia Apps & Ray Rees, 2007. "Cooperative Household Models," IZA Discussion Papers 3127, Institute for the Study of Labor (IZA). [Downloadable!]
  20. Guyonne Kalb, 2007. "Children, Labour Supply and Childcare: Challenges for Empirical Analysis," Melbourne Institute Working Paper Series wp2007n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  21. Reuben Gronau & Daniel S. Hamermesh, 2003. "Time Vs. Goods: The Value of Measuring Household Production Technologies," NBER Working Papers 9650, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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