IDEAS home Printed from https://ideas.repec.org/p/oxf/wpaper/16.html
   My bibliography  Save this paper

Children and Demand: Direct and Non-Direct Effects

Author

Listed:
  • Valerie Lechene
  • Martin Browning

Abstract

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.

Suggested Citation

  • Valerie Lechene & Martin Browning, 2002. "Children and Demand: Direct and Non-Direct Effects," Economics Series Working Papers 16, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:16
    as

    Download full text from publisher

    File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper16.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Hotz, V Joseph & Miller, Robert A, 1988. "An Empirical Analysis of Life Cycle Fertility and Female Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 91-118, January.
    3. 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 179-199, August.
    4. 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 720-744, August.
    5. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-1475, September.
    6. Dickens, Richard & Fry, Vanessa & Pashardes, Panos, 1993. "Non-linearities and Equivalence Scales," Economic Journal, Royal Economic Society, vol. 103(417), pages 359-368, March.
    7. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    8. 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.
    9. 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 765-799, July.
    10. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Lyn Craig, 2007. "How Employed Mothers in Australia Find Time for Both Market Work and Childcare," Journal of Family and Economic Issues, Springer, vol. 28(1), pages 69-87, March.
    3. Laura Blow & Valérie Lechene & Peter Levell, 2014. "Using the CE to Model Household Demand," NBER Chapters,in: Improving the Measurement of Consumer Expenditures, pages 141-178 National Bureau of Economic Research, Inc.
    4. Martina Kirchberger, 2014. "Preferences over Leisure and Consumption of Siblings and Intra-Household Allocation," Economics Series Working Papers 713, University of Oxford, Department of Economics.
    5. Christophe Kolodziejczyk, 2006. "A Note on the Correlated Random Coefficient Model," CAM Working Papers 2006-10, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    6. Christophe Kolodziejczyk, 2006. "Retirement and Fixed Costs to Work: An Empirical Analysis," CAM Working Papers 2006-09, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.

    More about this item

    Keywords

    children; demand; fixed effects; state dependence; intra-household effects;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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: (Anne Pouliquen). General contact details of provider: http://edirc.repec.org/data/sfeixuk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.