One of the important determinants of fertility behavior is the value (cost and benefits) of children as perceived by parents. This value is likely to vary by child and parental characteristics, household income, and other aspects of the socioeconomic environment. Since it is non-economic as well as economic in nature, the true value can only be obtained after a proper aggregation of these two different types of values. This paper estimates the value of children by infant health and birth order using a dynamic programming model. The underlying hypothesis is that the observed fertility outcome of parents is the solution to their life-cycle optimization problem. Findings from the National Longitudinal Survey of Youth (1979 Cohort) indicate that the perceived net benefits from a child are larger the earlier it is in the birth order. Better-educated mothers have a higher benefit from children early in the birth order than lower-educated mothers. Amongst first children, those who experienced poor health during infancy yield a higher value than healthy children to their parents.
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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 I12 - Health, Education, and Welfare - - Health - - - Health Production