Income
All Australian studies find that in absolute dollar terms the costs of children increase with income. However, there are relatively few Australian estimates of how the costs of children (in percentage terms) vary with income. Using a demand systems approaches, Tran Nam and Whiteford (1990) and Valenzuela (1999) find virtually no variation in the costs of children across income ranges. In contrast, Percival and Harding find that the equivalence scale costs of children decreasing as income increases (see Table 4). Henman (2005) finds a similar pattern with the proportion of income needed to meet the low cost standard higher than the proportion needed to meet the modest but adequate standard (Table 5).
Table 4. Estimates of the costs of children by income, Percival and Harding (2005)
| |
Number of children |
| |
1 |
2 |
3 |
4 |
| |
Equivalence scale |
| Low income |
1.21 |
1.38 |
1.53 |
1.66 |
| Medium income |
1.16 |
1.28 |
1.37 |
1.45 |
| High income |
1.12 |
1.21 |
1.27 |
1.33 |
| Average |
1.15 |
1.26 |
1.35 |
1.42 |
Source: Percival and Harding (2005). Estimated using the 1998-99 Household Expenditure Survey.
Table 5. Budget standards estimates of the costs of children by living standard, Henman (2005)
| Methodology |
Number of children |
| |
1 |
2 |
3 |
4 |
| |
Equivalence scale |
| Low cost |
1.26 |
1.51 |
1.69 |
1.87 |
| Modest but adequate |
1.23 |
1.46 |
1.61 |
1.79 |
Source: Derived from Henman (2005) and unpublished data.
Child age
A number of Australian studies have estimated how the costs of children vary with the age of the child. Almost without exception these studies have found that the costs of children increase with age. There is more difference between studies as to the extent to which the costs increase with the age of the child.
Australian studies which have found that the costs of children increase with the age of the child include Lee (1989)
22, Lovering (1984), Henman (2001, 2005), Percival and Harding (2000, 2005), Tran Nam and Whiteford (1990) and Saunders et al. (1998). A number of international studies have also found that the costs of children increase with the child age (e.g. Betson 1990; Lino 2004; Turchi 1983).