The Cost of Raising a Child: Equivalence Scales in the United States

Peibin Hou, Falin Sun, Wendiam Sawadgo, Samir Huseynov and Wenying Li

No 360939, 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO from Agricultural and Applied Economics Association

Abstract: As fertility rates drop to another historical low, understanding the economic burden of childrearing on household income, a main economic reason for falling birth rate, has become more crucial than ever. This study calculates a subjective equivalence scale explaining how much the income of a two-adult, one-child household should increase to maintain the same level of life satisfaction as a two-adult household, using a nationally representative U.S. sample. The results suggest that the equivalence scale for a two-adult, one-child household is 1.18, indicating that raising a child costs 18% of a two-adult household’s income. Our analysis indicates that programs like the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the National School Lunch Program (NSLP) may be overly generous for households with one child, while the tax deduction policy does not cover child-rearing costs sufficiently.

Keywords: Consumer/Household Economics; Labor and Human Capital (search for similar items in EconPapers)
Pages: 16
Date: 2025
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Journal Article: The cost of raising a child: Equivalence scales in the United States (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea25:360939

DOI: 10.22004/ag.econ.360939

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