Children and Demand: Direct and Non-Direct Effects
It is universally accepted that children have important effects on household demand patterns. This is usually attributed to the direct effect of children; for example children are food intensive. Alternative inferences are that the observed correlations between children and demand patterns are due to non-direct effects, such as fixed effects, state dependence or intra-household effects. These non-direct effects make the consistent estimation of direct effects problematic. We employ a French family expenditure survey that has a number of unusual features to explore the source of the correlation between children and demands. In a first set of tests, we use a sample of older households (over-55`s) for whom we have the details of their completed fertility and whether or not they currently have children living at home. We consider only those who do not have children currently living at home. If there are only direct effects then the demand patterns of those who have had children should be the same as those who never had children. We find that this is not the case. For the second set of tests, we use a sample of couples aged up to 55 and test for the exogeneity of children variables using background variables as instruments for children. We find that children are not exogenous for some goods. These two findings together cast doubt on the usual practice of identifying direct children effects with the coefficients on the children variables in demand equations.
|Date of creation:||01 Jul 2002|
|Date of revision:|
|Contact details of provider:|| Postal: Manor Rd. Building, Oxford, OX1 3UQ|
Web page: http://www.economics.ox.ac.uk/
More information through EDIRC
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.:
- Martin Browning & Pierre-Andre Chiappori, 1994.
"Efficient Intra-Household Allocations: a General Characterization and Empirical Tests,"
Department of Economics Working Papers
1994-02, McMaster University.
- M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
- Martin Browning & P.A. Chiappori, 1996. "Efficient Intra-Household Allocations - A General Characterization and Empirical Tests," Discussion Papers 96-10, University of Copenhagen. Department of Economics.
- Browning, M. & Chiappori, P.A., 1994. "Efficient Intra-Household allocations: A General Characterization and Empirical Tests," DELTA Working Papers 94-16, DELTA (Ecole normale supérieure).
- Gronau, Reuben, 1988. "Consumption Technology and the Intrafamily Distribution of Resources:," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1183-1205, December.
- Dickens, Richard & Fry, Vanessa & Pashardes, Panos, 1993. "Non-linearities and Equivalence Scales," Economic Journal, Royal Economic Society, vol. 103(417), pages 359-68, March.
- Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-75, September.
- Hotz, V Joseph & Miller, Robert A, 1988.
"An Empirical Analysis of Life Cycle Fertility and Female Labor Supply,"
Econometric Society, vol. 56(1), pages 91-118, January.
- V. Joseph Hotz & Robert A. Miller, . "An Empirical Analysis of Life Cycle Fertility and Female Labor Supply," University of Chicago - Population Research Center 86-15, Chicago - Population Research Center.
- Arthur Lewbel, 1985. "A Unified Approach to Incorporating Demographic or Other Effects into Demand Systems," Review of Economic Studies, Oxford University Press, vol. 52(1), pages 1-18.
- Deaton, Angus S & Muellbauer, John, 1986. "On Measuring Child Costs: With Applications to Poor Countries," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 720-44, August.
- Thomas Mroz, .
"The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions,"
University of Chicago - Population Research Center
84-8, Chicago - Population Research Center.
- Mroz, Thomas A, 1987. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, Econometric Society, vol. 55(4), pages 765-99, July.
- Cain, Glen G & Dooley, Martin D, 1976. "Estimation of a Model of Labor Supply, Fertility, and Wages of Married Women," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S179-99, August.
- Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:16. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monica Birds)
If references are entirely missing, you can add them using this form.