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The Time Cost of Children and Equivalent Full Incomes

Author

Listed:
  • Bojer, Hilde

    () (Dept. of Economics, University of Oslo)

Abstract

When defining and estimating the cost of children and equivalent incomes, children's consumption is normally defined as the household's cash expenditure on consumption goods for children. In fact, a heavy item in the cost of children under school age is time. This paper examines the cost of children and the definition of equivalent incomes in a simple model where income is full income a.."l defined by Gary Becker, while time spent caring for children at home is unpaid work. Equivalent full income for a household with pre-school children is defined. It is also shown that, as long as the wage rate is higher than the price of child care, the parents' participation in paid labour will be the same whether the care time is compensated for by free child care or as a lump sum. Both kinds of compensation will increase parents' consumption of leisure. It is therefore argued that, in the absence of reliable data for full income, time studies provide a useful welfare indicator by giving data for leisure. The assumptions of the model are discussed both from the point of view of welfare analysis, and from the point of view of the capability approach to human well-being.

Suggested Citation

  • Bojer, Hilde, 2002. "The Time Cost of Children and Equivalent Full Incomes," Memorandum 08/2002, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2002_008
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2002/Memo-08-2002.pdf
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    More about this item

    Keywords

    Cost of children; equivalent incomes; welfare analysis; capability approach to human well-being;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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