Abstract
Heterogeneity of preferences between households with or without children is a source of difficulties in the computation of the cost of children on cross section data. However, with panel data, it becomes possible to make comparisons between individual welfares. The influence of births or children leaving parental home on parental welfare can be directly measured through subjective questions. The European Panel incorporates such questions about matching between income and spending, but with polytomic answers. Nethertheless, using short panels, the computation of individual effects is difficult since usual procedures are not convergent. Chamberlain [1984] has developed a procedure leading to converging estimators even if the time dimension is short. Used on our panel data, this procedure gives results which are very different from cross section estimations.
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