Parental time restrictions and the cost of children: insights from a survey among mothers
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Parental time restrictions and the cost of children: insights from a survey among mothers Melanie Borah 1 & Andreas Knabe 1,2,3
& Kevin Pahlke
1
Received: 4 April 2019 / Accepted: 27 September 2020/ # The Author(s) 2020
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. Keywords Child cost . Equivalence scales . Full-time employment . Subjective income evaluations
* Melanie Borah [email protected] Andreas Knabe [email protected] Kevin Pahlke [email protected]
1
Faculty of Economics and Management, Otto von Guericke University Magdeburg, P.O. Box 4120, 39016 Magdeburg, Germany
2
CESifo, Munich, Germany
3
IWH, Halle, Germany
M. Borah et al.
1 Introduction At given levels of total commodities consumption, the standard of living of households varies with their size and structure. In general, larger households need more commodities than smaller households to provide their members the same standard of living. Due to economies of scale in consumption, a household’s consumption needs are generally not proportional to the number of its members. Moreover, the consumption requirements of certain household members may be systematically lower or higher than those of an average single person. Children, for instance, provide such a case. For physiological reasons (e.g. lower calorie intake), their needs may be considerably lower than those of an additional adult. Equivalence scales are an important tool capturing such differences in needs and economies of scale in household consumption. Typically, they quantify the percentage increase in a single adult’s household income or expenditure necessary to leave the household’s standard of living unchanged as additional members join it. Frequently, equivalence scales are restricted to considering money incomes or expenditures. While this is helpful in many applications, it neglects that material consumption requirements, in principle, can be satisfied (although not fully interchangeably) in two different ways – by purchasing marketed goods and services using money income and by producing them at home using time. Household production as a substitute for market commoditie
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