Costs of rearing children in agricultural economies: An alternative estimation approach and findings from rural Bangladesh

Abstract

There are changes in child costs during demographic transition. This study examines household time allocation from 66 agricultural households in 3 villages in Tangail District in rural north central Bangladesh in 1984-85 (371 days). Component and total child-rearing costs are estimated in alternative ways. Conventional "opportunity wage" measures are considered overestimated. The methodological shortcomings of direct cost accounting procedures and consumer demand methods in computing time cost and monetary cost of child rearing are pointed out. In this study's alternative computation, age standardized equivalent costs are generated. Child food consumption costs were generated from a large national survey conducted in 1983. Nonfood expenditures were estimated by food to nonfood expenditure ratios taken from the aforementioned survey. For estimating breast-feeding costs, an estimate was produced based on the assumption that costs for infant food consumption were a fixed proportion of food costs for older children. Land ownership groups were set up to reflect socioeconomic status: 1) landless households, 2) marginal farm households with 1 acre or .4 hectares of land, 3) middle income households with 1-2 acres of land, 4) upper middle income households with 2-4 acres of land, and 5) upper income or rich households with over 4 acres of land. The nonmarket wage rate for hired household help was used to determine the value of cooking, fetching water, and household cleaning and repairing. The results confirm the low costs of child rearing in high fertility societies. Productive nonmarket activities are effective in subsidizing the costs of children. The addition of a child into households already with children has a low impact on time costs of children; "this economies of scale effect is estimated ... at 20%." The highest relative costs were found in the lowest income households, and the lowest costs were in the highest income households. 5% of total household income is devoted to child rearing in the lowest income households compared to 1% of income in the highest income households. The implications are that fertility decline is more directly related to structural changes in the economy, satisfaction of existing demand for family planning, and the producing additional demand for fertility control.