Childrens´Income

Description

Declining fertility has turned from blessing to curse after the end of industrial society, and, for a number of reasons from cultural heritage to welfare state financing, the mostly shrin­king post-industrial societies struggle to understand and potentially to reverse the decline in the number of babies born.

One general argument relating to the decline in children is related to the direct and indirect cost of children: Especially for women, raising children needs resources which could be used either in investment processes in human and social capital or directly in the generation of income and consumption (Becker 1981). Individuals are proposed to con­trast their expected economic situations with and without children: the difference between both is the cost which one has to compare with the expected happiness and other utilities derived from having kids.

This choice situation is interesting for researchers and policymakers since the difference between the economic situation with and without children is the subject of a number of policy measures from family allowances over tax deductions for childcare and publicly offered childcare to policies for gender-equality. It is a question especially interesting for comparative research since both sides of the research question are of interest in comparing welfare states and the behavior of their citizens: On the one hand, how and over which mediating channels does income differ with having children? On the other hand, is fertility influenced at all by income differences, is it influ­en­ced uniformly over time, societies, and individual characteristics, or what interactions exist between fertility and the expected income consequences? Does the effect on disposable income count alone or are the effects on other parts of the income likewise or even more important?

Interestingly, this choice calculus and its comparative aspects have not yet been empiri­cal­ly studied.

Our project aims to explore expected income consequences of children and their consequences on fertility with an analysis of data from the Luxembourg Income Study. The Luxembourg Income Study includes data from 15 Western European countries with between 4 (Belgium and Switzerland) and 8 (Germany, Swe­den, UK) data waves which constitute the core of the analysis. Data from the U.S., Canada, and Australia, as well as from five Eastern European countries, will be used for compari­son.

The consequences of having children on family incomes of women after the application of equi­valence scales are estimated using a Mincer-type regression (Mincer 1958) in which having children enters as additional income determinant, differentiated by individual and country charac­te­ris­tics. We differentiate sets of women which are identical in all available characteristics only besides the number of children they have. Assuming that women’s income expecta­tions are not systematically biased, the group-specific income difference between women with and wo­men without children in any given year is the difference they had to face a priori in their deci­sion to have children. We expect that the larger the diffe­rence, the lower the probability to have children, and study what drives the strength of the relation, i.e. interaction effects bet­ween income difference and outside variables on the probability to have (additional) child­ren.

Institutions
  • Exzellenzcluster
Funding sources
NameProject no.DescriptionPeriod
Exzellenzinitiative416/12no information
Further information
Period: 01.01.2012 – 31.12.2012