The effect of number and age of children on household expenditure
Date
2005-03
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Abstract
With the Philippines' rapid population growth and high fertility, the need to address population issues is urgent. Perceptions of the value and cost of children are known to influence fertility behavior. The effect of children on household expenditure has been used to illustrate the direct economic costs of children. This paper examines the impact of the number and age of children in the family on the consumption behavior of a household. Using data from the Family Income and Expenditure Survey (FIES) of 2000, it looks at how an additional child contributes to a family's expenditures by estimating a consumption function for different expenditure categories commonly regarded as basic necessities. Expenditure categories under study are food, utilities, clothing, education, medical care, housing, transportation and communication, and personal care and effects. Regression results show that, with the exception of utilities, additional children have a significant effect on household expenditure. Only food and personal care and effects expenditures were found to increase with additional children; clothing, education, medical care, housing, transportation, and communication expenditures generally decrease with an increase in the number of children. The findings of this study therefore suggest a reduction in the welfare of the members of a household and provide an argument for parents to prefer a smaller number of children and to choose quality over quantity. Through implementation of family planning, "beyond family planning", and human capital development programs built around motivating parents to desire a smaller family size, a good population policy can effectively guide parents in their child bearing decisions.
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Keywords
Household expenditure, Budget allocation, Family spending, Family expenditure, Family budget allocation