Internal Seminar: Anderson Vil (PSE)

The Household Demand for Leisure, the Price of Time and the Full Cost of Children: A Structural Model and Evidence from the PSID

Abstract:
We propose a novel approach to estimating the full cost of children – the sum of monetary and time costs – by endogenizing the price of parental time rather than assuming it is equal to the parents’ wage rate. In this approach, the price of time depends on how parents perceive their time with children, whether as a leisure-like activity or more as a labor-like activity. We then develop a simplified collective model of leisure demand for working couples, incorporating individual preferences and childcare technology, and estimate it using 2019 PSID data. This allows us to recover the price of parental time and the full cost of children. We find that mothers perceive 44% of their childcare time as labor, compared to 35% for fathers. Our results also highlight that a substantial portion of the full cost of children is non-monetary.

Room A406.