(DP 1979-11) The Economic Costs of Children in the Philippines: A Survey

Abstract

This paper attempts to survey the state of the art on the economic costs of children. Relevant studies suggest rough orders of magnitude for the direct, indirect and social costs of children. The pattern of these costs seems consistent with the persistence of high fertility especially in rural areas. Direct cost appears sufficiently onerous but indirect (opportunity) costs do not seem to be a major consideration in the rural setting. These private costs, in any case, appear to be more than offset by the stream of economic benefits, not to mention non-economic satisfaction from children. By contrast, the social costs of high fertility seems considerable but are not material to the extent that fertility decisions are made within the household framework. Persistently high fertility may be further explained in the context of the threshold model. If a household is poor and/or rural (i.e., below the threshold), the graduation of a child from net consumer to net producer would, by definition, push the household up toward the threshold (and down the mother's labor force participation curve), helping to foster natural fertility. This graduation seems faster the poorer the household. The implication for policy, other than the obvious one of uplifting the masses from poverty, would seem to be to bring social cost considerations to bear on household fertility decisions through information and education.