The Social Value of Becoming a Parent

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DESCRIPTION (provided by applicant): Recent estimates indicate that the net present social value of a newborn child in the U.S. is quite large, as much as a quarter million dollars if the child is born to highly-educated parents. This result takes into account the child's lifetime consumption of public benefits and tax payments, as well as the corresponding flows associated with the child's descendants. Key components of this positive externality are the financing of public goods, intergenerational transfers supporting health, education, and pension programs, and the sharing of government debt. The economic-demographic models used to develop such estimates treat the population or subpopulations as homogeneous with respect to age-specific fertility. Yet a substantial, and growing, proportion of women in the U.S. remain childless, while many fathers remain completely uninvolved in their children's lives. In view of the likely differences between those who become parents, and those who remain childless, with respect to both the contributions to and the consumption of public expenditures, it is likely that the externality associated with a first birth is quite different from that associated with a second or higher-order birth. The purpose of the proposed study is to investigate this possibility, and to quantify the net fiscal impact of the transition to parenthood. In particular, this project will (1) produce estimates of the age profile of taxes, transfers, and the consumption of public goods, specific to parents and the childless; and (2) use the estimated age profiles in conjunction with a previously developed inter-temporal economic-demographic accounting model, in order to produce estimates of the net present value to society-measured with respect to fiscal impacts-of becoming a parent.