Consumption and Children

Research output: Contribution to journalJournal articleResearchpeer-review

Consumption by couples rises sharply in the beginning and falls later in life; the causes of the early rise are hotly contested. Among the suggestions are rule of thumb behavior, demographics, liquidity constraints, the precautionary motive, and nonseparabilities between consumption and labor supply. We develop two tests of the extreme hypothesis that only changes in family structure matter. We estimate effects of the numbers and ages of children on consumption. These estimates allow us to rationalize all of the increase in consumption without recourse to any of the causal mechanisms. Our estimates can be interpreted either as giving upper bounds on the effects of children or as evidence that the other causes are not important.
Original languageEnglish
JournalReview of Economics and Statistics
Issue number1
Pages (from-to)93-111
Number of pages19
Publication statusPublished - 2009

ID: 10113578