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The Household Demand for Leisure, the Price of Time and the Full Cost of Children: A Structural Model and Evidence from the PSID

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  • Olivier Donni

    (THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université)

  • Anderson Vil

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris)

Abstract

We propose a novel approach to estimating the full cost of children -the sum of monetary and time costs -by endogenizing the price of parental time rather than assuming it is equal to the parents' wage rate. In this approach, the price of time depends on how parents perceive their time with children, whether as a leisure-like activity or more as a labor-like activity. We then develop a simplified collective model of leisure demand for working couples, incorporating individual preferences and childcare technology, and estimate it using 2019 PSID data. This allows us to recover the price of parental time and the full cost of children. We find that mothers perceive 44% of their childcare time as labor, compared to 35% for fathers. Our results also highlight that a substantial portion of the full cost of children is non-monetary.

Suggested Citation

  • Olivier Donni & Anderson Vil, 2025. "The Household Demand for Leisure, the Price of Time and the Full Cost of Children: A Structural Model and Evidence from the PSID," PSE Working Papers halshs-05343771, HAL.
    • Handle: RePEc:hal:psewpa:halshs-05343771
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-05343771v1
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