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Consumption approach to the cost of children

Consumption approach to the cost of children. The case of China and Norway. Question : Is the consumption approach better suited to define the relative cost of children than the tradtional OECD- scale ?

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Consumption approach to the cost of children

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  1. Consumptionapproach to thecostofchildren The case of China and Norway Borgeraas, Brusdal & Li Zhengang

  2. Question: Is theconsumptionapproachbettersuited to definethe relative cost • ofchildrenthanthetradtional OECD-scale? • Hypothesis: The main weakness’s in the OECD-scale – in addition to lackof • empiricalfoundation– areitsinsensitiveness to : • place (country, region) • culture • economic and socialchange • distributionofwelfare • Theoretical and methodologicalambitions: bettermeasures and scales for measuring • costoflivelihood, in particular more appropriateweights for thecostofchildren. Borgeraas, Brusdal & Li Zhengang

  3. To illustratethe main arguments wecompare China and Norway Norway Rich country Incrementalsocialchange Relativelyequal income distribution Welfare state High public spending on children’swelfare China • Rapid economic growth • Rapid socialchange • Different regional developments • Growingeconomic and socialinequality • Childrenare at thecentreof family consumption Borgeraas, Brusdal & Li Zhengang

  4. China: Borgeraas, Brusdal & Li Zhengang Becauseofexpandingeconomy, improved living standards, changedconsumerbehavior and childcenteredconsumption, weassumethatthecostofchildrenareincreasing. In 80 per cent of urban households withwageearners, a child’saverageconsumptionexceedsthatof an adult (Sun Yunxiao, 2000)

  5. The Engel’scoefficients in urban China and Norway Borgeraas, Brusdal & Li Zhengang

  6. The modified OECD scale • Eachadditional adult cost 50 per cent ofthe first adult • Children under 14 years have a consumptionneedthatamounts • to 30 per cent ofthe first adult • This ratio is the same in Norway as in urban and rural China • We have strongindicationsthatthe relative costofchildren is very • different in thesethreecontexts. • These differences are not visible with traditional measures, and we need an alternative • methods to measure the cost of children that accounts for time, space and pace of • Change. We argue for a consumption approach. Borgeraas, Brusdal & Li Zhengang

  7. Measures as input for policy • Classical economics and poverty research have always argued for • a material approach to levels of living: Income is treated as a • depended variable, and not the other way around. • In line with the classical tradition we have to ask some important • questions before we decide the poverty line. • - What do families/children need? • - What types of items (consumer goods) and activities can satisfy • these needs? • - How much does it cost to buy these items and participate • in these activities (consumption expenditure)? • - What income level equals this consumption level? Borgeraas, Brusdal & Li Zhengang

  8. Household expenses Case 3: Couple with 10-year-old child, Chendu. Husband 38, manager. Wife 28, clerk. Family income 120.000 Borgeraas, Brusdal & Li Zhengang

  9. Reference budget in China Borgeraas, Brusdal & Li Zhengang

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  15. Indvidualexpenses in different age groups in China Borgeraas, Brusdal & Li Zhengang

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  17. Budget expenditures for childrenaged6-13 in Norway and 7-12 in China Borgeraas, Brusdal & Li Zhengang

  18. Budget expenditures for childrenaged 14-17 in Norway and children ages 13 – 17 in China. Per cent Borgeraas, Brusdal & Li Zhengang

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