Household Production, Full Consumption and the Costs of Children

40 Pages Posted: 10 Nov 2003

See all articles by Patricia F. Apps

Patricia F. Apps

The University of Sydney - Faculty of Law; IZA Institute of Labor Economics

Ray Rees

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute); University of Sydney Law School

Date Written: May 2000

Abstract

Recent work criticises both the logic and relevance of the theoretical basis of the approach to estimating the costs of raising children adopted in much of the economics literature. This tends to be restricted purely to models in which the household members consume market goods with given household income. The "costs of children" are perceived essentially as market consumption costs. This ignores the fact that an important, possibly preponderant element of child costs takes the form of parental time, which must be diverted from alternative uses such as market work, other house-hold production activities and leisure, to care for children. The studies also ignore the question of the distribution of income among adults and, in particular, the differential incidence of child costs on adult members of the household. In this paper we first of all argue that a satisfactory theoretical approach to modelling child costs must simultaneously incorporate an "individualistic" formulation of the household (as in Apps and Rees, 1988, 99) and a formal treatment of household production (as suggested by Becker 1965, and adapted in Apps and Rees, 1988, 99). We then provide such a model. Using data from a recent Time Use Survey, we estimate specialized versions of the model for families with two children and use the results to derive the intra-family distribution of resources and implied child-rearing costs.

Keywords: Child costs, time allocation, household production

JEL Classification: J13, J22, D13

Suggested Citation

Apps, Patricia F. and Rees, Ray, Household Production, Full Consumption and the Costs of Children (May 2000). Available at SSRN: https://ssrn.com/abstract=249010 or http://dx.doi.org/10.2139/ssrn.249010

Patricia F. Apps (Contact Author)

The University of Sydney - Faculty of Law ( email )

Faculty of Law, New Law Building F10
The University of Sydney
Sydney, NSW 2006
Australia
+61 2 9351 0241 (Phone)
+61 2 9351 0200 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Ray Rees

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Munich, D-80539
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

University of Sydney Law School ( email )

Sydney
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
178
Abstract Views
1,638
Rank
304,866
PlumX Metrics