Abstract
An important aspect when analyzing economic inequality between households with children is time. At given monetary incomes, the material well-being of families may be very different depending on how much time parents have at their disposal. In this paper, we provide estimates of the subjectively perceived cost of children depending on the extent of parental time restrictions. Building on a study by Koulovatianos, Schröder and Schmidt (J. Bus. Econ. Stat. 27:42–51, 2009) that introduces a novel way of using subjective income evaluation data for such estimations, we conduct a refined version of the underlying survey, focusing on young women with children in Germany. Our study confirms that the perceived monetary cost of children is substantial and increases with parental nonmarket time restrictions. The experienced loss in material living standards associated with supplying time to the labor market is sizeable for families with children.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Apps, P., Rees, R.: Household production, full consumption and the costs of children. Labour Econ. 8(6), 621–648 (2001)
Bertrand, M., Mullainathan, S.: Do people mean what they say? Implications for subjective survey data. American Economic Review. 91(2), 67–72 (2001)
Biewen, M., Juhasz, A.: Direct estimation of equivalence scales and more evidence on Independence of base. Oxf. Bull. Econ. Stat. 79(5), 875–905 (2017)
Bittman, M., Goodin, R.E.: An equivalence scale for time. Soc. Indic. Res. 52(3), 291–311 (2000)
Bollinger, C., Nicoletti, C. and Pudney, S.: Two Can Live as Cheaply as One... But Three’s a Crowd. Discussion Papers in Economics, No. 12/23, The University of York (2012)
Bradbury, B.: Family size equivalence scales and survey evaluations of income and well-being. Journal of Social Policy. 18, 383–408 (1989)
Bradbury, B.: Time and the cost of children. Rev. Income Wealth. 54(3), 305–323 (2008)
Bundesagentur für Arbeit: Analyse der Grundsicherung für Arbeitsuchende. Juli 2013. Nürnberg: Bundesagentur für Arbeit (2013)
Coulter, F.A., Cowell, F.A., Jenkins, S.P.: Differences in needs and assessment of income distributions. Bulletin of Economic Research. 44(2), 77–124 (1992)
Cutler, D.M., Katz, L.F.: Rising inequality? Changes in the distribution of income and consumption in the 1980s. Am. Econ. Rev. 82, 546–551 (1992)
Ekert-Jaffé, O., Grossbard, S.: Time cost of children as parents' foregone leisure. Math. Popul. Stud. 22(2), 80–100 (2015)
Folbre, N., Murray-Close, M., and Suh, J.: Equivalence scales for extended income in the US. Review of Economics of the Household, 1–39 (2017)
Frey, B.S., Stutzer, A.: What can economists learn from happiness research? J. Econ. Lit. 40(2), 402–435 (2002)
Gardes, F., Starzec, C.: A restatement of equivalence scales using time and monetary expenditures combined with individual prices. Rev. Income Wealth. 64(4), 961–979 (2018)
Garner, T.I., de Vos, K.: Income sufficiency v. poverty Results from the United States and The Netherlands. Journal of Population Economics. 8(2), 117–134 (1995)
Goedhart, T., Halberstadt, V., Kapteyn, A., and Van Praag, B.: The poverty line: concept and measurement. Journal of Human Resources, 503–520 (1977)
Gustafsson, B., Kjulin, U.: Time use in child care and housework and the total cost of children. J. Popul. Econ. 7(3), 287–306 (1994)
Kahneman, D., Krueger, A.B., Schkade, D., Schwarz, N., Stone, A.A.: Would you be happier if you were richer? A focusing illusion. Science. 312(5782), 1908–1910 (2006)
Kapteyn, A., Van Praag, B.: A new approach to the construction of family equivalence scales. Eur. Econ. Rev. 7(4), 313–335 (1976)
Koulovatianos, C., Schröder, C., Schmidt, U.: On the income dependence of equivalence scales. J. Public Econ. 89(5), 967–996 (2005)
Koulovatianos, C., Schröder, C., Schmidt, U.: Nonmarket household time and the cost of children. J. Bus. Econ. Stat. 27(1), 42–51 (2009)
Nelson, J.A.: Household equivalence scales: theory versus policy? J. Labor Econ. 11(3), 471–493 (1993)
OECD: What are equivalence scales?, available at http://www.oecd.org/eco/growth/OECD-Note-EquivalenceScales.pdf (2005)
Pahl, J.: Family finances, individualisation, spending patterns and access to credit. Journal of Socio-Economics. 37(2), 577–591 (2008)
Pollak, R.A., Wales, T.J.: Welfare comparisons and equivalence scales. Am. Econ. Rev. 69(2), 216–221 (1979)
Rojas, M.: A subjective well-being equivalence scale for Mexico: estimation and poverty and income-distribution implications. Oxf. Dev. Stud. 35(3), 273–293 (2007)
Schwarze, J.: Using panel data on income satisfaction to estimate equivalence scale elasticity. Rev. Income Wealth. 49(3), 359–372 (2003)
Van den Bosch, K., Callan, T., Estivill, J., Hausman, P., Jeandidier, B., Muffels, R., Yfantopoulos, J.: A comparison of poverty in seven European countries and regions using subjective and relative measures. J. Popul. Econ. 6(3), 235–259 (1993)
Van Praag, B.: The welfare function of income in Belgium: an empirical investigation. Eur. Econ. Rev. 2(3), 337–369 (1971)
Van Praag, B.M.S., Ferrer-i-Carbonell, A.: Happiness Quantified: a Satisfaction Calculus Approach. Oxford University Press, Oxford (2004)
Van Praag, B., Van der Sar, N.L.: Household cost functions and equivalence scales. J. Hum. Resour. 23(2), 193–210 (1988)
Van Praag, B.M., Warnaar, M.F.: The cost of children and the use of demographic variables in consumer demand. Handb. Popul. Fam. Econ. 1, 241–273 (1997)
Funding
Open access funding provided by Projekt DEAL.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that they have no conflict of interest.
Additional information
Publisher’s Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Electronic supplementary material
ESM 1
(DOCX 64 kb)
Rights and permissions
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
About this article
Cite this article
Borah, M., Knabe, A. & Pahlke, K. Parental time restrictions and the cost of children: insights from a survey among mothers. J Econ Inequal 19, 73–95 (2021). https://doi.org/10.1007/s10888-020-09467-2
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10888-020-09467-2