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The authors gratefully acknowledge financial support from the Russell Sage Foundation, from a grant by the Assistant Secretary of Planning and Evaluation in the U.S. Department of Health and Human Services to the Institute for Research on Poverty, and from the Economics Program of the National Science Foundation. We are very grateful to Kathryn Wilson for her assistance with this paper, especially her significant contributions to the tables; to Elizabeth Evanson for her editorial work; and to Dawn Duren for her excellent typing. The paper has benefited from comments and criticisms of four anonymous referees, John Antel, Jere Behrman, Andrea Beller, Mary Corcoran, Jonathan Crane, Sheldon Danziger, Greg J. Duncan, B. J. Kiker, Susan Mayer, Robert Plotnick, and David Ribar.
I. Introduction
THE LEVEL of the nation's investment in children is enormous. Government expenditures on elementary, secondary, and postsecondary schooling alone totaled about $372 billion in 1991, about 6.6 percent of GNP (U.S. Bureau of the Census 1992, Table 211). In addition, hundreds of billions of dollars are spent for housing, feeding, and clothing children, for transporting them, for providing nonparental care services, and for assuring provision of health care services. Perhaps the largest of all costs is the implicit value of the time that parents spend nurturing, monitoring, teaching, and caring for their children.
Table 1 presents a rough--and lowerbound--estimate of the annual social investment in the 66.5 million American children (ages 0-18), who in 1992 comprised about 27 percent of the population. Our calculations distinguish the investments made by the public sector from those made by parents and other individuals. We estimate that annual expenditures on children total about $898 billion, nearly 15 percent of GDP. The largest component of the private cost of children is the direct expenditure of parents. Another important component of parental costs is the time spent by parents who forgo either work or leisure time in caring for children in the home.(l)
Neglecting any costs of mother's child care time beyond 40 hours and all father's child care time, and assuming that child care time equals the difference between actual work time and an estimate of the mother's work time if she did not have children, we arrive at a lower bound estimate of the opportunity costs...