The Quantity‐Quality Tradeoff: A Cross‐Country Comparison of Market and Nonmarket Investments per Child in Relation to Fertility

Vargha, L. and Donehower, G. (2019), The Quantity‐Quality Tradeoff: A Cross‐Country Comparison of Market and Nonmarket Investments per Child in Relation to Fertility. Population and Development Review, 45: 321-350. doi:10.1111/padr.12245

ABSTRACT:

The aim of this article is to show how various investments in children are related to fertility in a cross-national comparative context. We consider “child quality” as produced not only by market goods and services, but by inputs of unpaid care time as well. We integrate market investments in children with the imputed value of unpaid time devoted to childcare and other household services. Our measures are based on National Transfer Accounts (NTA) that disaggregate national accounts by age, extended by National Time Transfer Accounts (NTTA), which estimate the same quantities for nonmarket household production activities using time-use surveys and imputed wages. We find that: (1) unpaid care time represents a large portion of total investments in children; (2) there is a significant negative association between fertility and investments per child; and (3) incorporating unpaid care time into the analysis makes theorized relationships between quantity and quality of children more robust.