Parental Expenditures of Time and Money on Children in the U.S.

Abstract

How much do parents spend on children in the U.S.? While the U.S. Department of Agriculture (USDA) regularly addresses this question, it considers only money expenditures, omitting the sizeable monetary value of parental time. The 2017 and 2019 Panel Study of Income Dynamics offers a unique opportunity to provide a more complete picture. Analysis of this data reveals considerable substitutability between unpaid and paid childcare and generates estimates of average total expenditures that include a replacement cost estimate of the value of parental time. These estimates, constructed for comparability with USDA measures, reveal both higher levels of average parental expenditure and different patterns across household structure and income. These findings challenge public policies that use USDA estimates as a reference point for setting the child support obligations of non-custodial parents and reimbursement rates for foster care. They also undermine many conventional equivalence scales and measures of income/time poverty.