Cheaper by the dozen? The marginal time costs of children in the Philippines

Abstract

The important relationship between fertility rates and economic development has prompted many researchers to try and better understand the determinants of family size. It has repeatedly been shown that the costs of children, both direct and indirect, are one of the most important determinants of fertility, exerting a significantly negative effect on birth rates in both developed and developing countries. Many studies which investigate the relationship between the costs of children and family size have assumed that these costs do not vary with parity. However, there is substantial evidence that the marginal costs of children are not constant but decrease with birth order in developed countries. In this paper, the hypothesis that there are diminishing marginal time costs of children is tested using household data from the developing country setting of the Philippines. By examining the determinants of additional time spent in childcare before and after the birth of a child, it is found that the marginal time costs are not the same across households of various sizes. Firstborn children cost significantly more in terms of additional mother's time than children of higher birth orders. In addition, the time costs of the second child are found to be significantly greater than those of the third child. However, these economies of scale in childcare are limited and do not extend beyond three children. The effect of birth spacing on the marginal time costs of children is also found to be significant.