Child Quality and the Demand for Children

Abstract

The past decade has brought a substantial increase in economic analyses of phenomena outside the traditional realm of economics. An already sizable portion of such effort has been directed toward the determinants of desired fertility and family size.' In this paper, I will first consider the degree to which pure economic theory can, or cannot, predict changes in completed fertility. The second, and the major emphasis of the study, is the way in which households produce the household commodity "child services."2 I argue that households can increase their production of child services either by increasing numbers of children (quantity) or by increasing the resource investment (quality) in existing children. Further, quantity and quality are postulated to be substitutes in the household's production function for child services. After presenting an economic model of desired family size, emphasizing the substitutability of numbers of children and child quality, I will discuss several of the model's important parameters and then offer an empirical formulation based on data from U.S. counties.