Relative cost of children: the case of rural Maharashtra, India

Conventionally, measurement of cost of children by iso-prop method [Int. Stat. Inst. Anal. 9 (1895) 1] involves equating budget share on food of the two households compared. In this paper we use an alternative necessary commodity, viz., adult good (as suggested by Blackorby and Donaldson [The Measurement of Household Welfare, Cambridge University Press, Cambridge (1994)]) in place of food and measure the relative cost of a child using iso-prop method in a single equation framework as well as in a demand system framework. The demand system, proposed herein, is a rank-two Quadratic Logarithmic (QL) system. Household level consumption expenditure data for the rural sector of Maharashtra, India, are used in this study. The results indicate that the nature of the commodity along with the effect of children on consumption of that particular commodity, plays a major role in determining child cost. [Copyright &y& Elsevier]