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The Price, Cost, Consumption and Value of Children

  • Bruce Bradbury

    (UNSW)

Though they are related, the price, cost, consumption and value of children are not the same. This paper explores two aspects of the relationship between these concepts. Even if we restrict attention to the domain of commodity consumption, the cost of children is not the same as children's consumption. In this context, the cost of children to their parents is often described with a consumer equivalence scale. It is shown here that, under reasonable assumptions, children's consumption of market goods is less than the 'equivalent income' of the household, but more than the 'cost of children'. Expenditure costs, however, are only part of the cost of children. This paper uses a variant of the 'adult goods' method to estimate the full costs of children, including both expenditure and time costs. Adult personal time (comprising pure leisure, sleep and other personal care) is used as the adult good. Preliminary estimates using Australian data suggest a very large cost of children. The paper discusses the limitations of the estimation approach and considers the broader welfare implications of these costs.

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File URL: http://128.118.178.162/eps/lab/papers/0402/0402003.pdf
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Paper provided by EconWPA in its series Labor and Demography with number 0402003.

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Date of creation: 12 Feb 2004
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Handle: RePEc:wpa:wuwpla:0402003
Note: Type of Document - pdf; prepared on Win2000; to print on A4;
Contact details of provider: Web page: http://128.118.178.162

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  1. Pencavel, John, 1987. "Labor supply of men: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 1, pages 3-102 Elsevier.
  2. Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier.
  3. 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.
  4. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
  5. Bruce Bradbury, 1992. "Measuring the Cost of Children," Discussion Papers 0032, University of New South Wales, Social Policy Research Centre.
  6. Nelson, Julie A, 1992. "Methods of Estimating Household Equivalence Scales: An Empirical Investigation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 38(3), pages 295-310, September.
  7. Buhmann, Brigitte, et al, 1988. "Equivalence Scales, Well-Being, Inequality, and Poverty: Sensitivity Estimates across Ten Countries Using the Luxembourg Income Study (LIS) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-42, June.
  8. Nelson, Julie A, 1988. "Household Economies of Scale in Consumption: Theory and Evidence," Econometrica, Econometric Society, vol. 56(6), pages 1301-14, November.
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