Chapter 10 Econometric identification of the cost of maintaining a child

Abstract

The chapter estimates the cost of maintaining a child, at different ages, the cost of being single, and the cost of additional adults present in a family, with the aim of making comparable the income levels of different households. The study investigates the issue of econometric identification of equivalence scales within a demand system modified to include demographic characteristics consistently with economic theory. It shows that a robust estimation of equivalence scales must take into formal consideration the problem of econometric identification. The estimate also puts forward all-encompassing demographic specifications to identify costs due to differences in needs, household lifestyles, and economies of scale.

Citation

Menon, M. and Perali, F. (2010), "Chapter 10 Econometric identification of the cost of maintaining a child", Bishop, J.A. (Ed.) Studies in Applied Welfare Analysis: Papers from the Third ECINEQ Meeting (Research on Economic Inequality, Vol. 18), Emerald Group Publishing Limited, Leeds, pp. 219-255. https://doi.org/10.1108/S1049-2585(2010)0000018013