Estimation of the Cost of Children and Policy Implications

Abstract

◈ 자녀 양육 추계 방법론의 타당성 검토 ◈ 외국의 자녀 양육 비용 추계 결과 및 활용 검토 ◈ 국내 1인당 자녀 양육비 비용 추계 ◈ 자녀 양육 비용 부담 현황 분석 ◈ 자녀 양육비용 지원 정책에 대한 제언

The policy which aims to reduce the cost of children is one of the important family policies especially in Korea where has very low fertility rate. In order to suggest a policy for reducing cost of raising children, this study estimates the cost of children and contributes to initiate policy to support families which rear children. This paper reviews various methods estimating cost of children and suggests the best methods would be the per capita methods. Based on the per capita method this study also uses per capita methods by expenditure items, and replicates the methods of United State Department of Agriculture, utilizing Household Expenditure data released from Statistics Korea in 2009. Based on the per capita method, monthly average expenditure per child is estimated to be 755,972 won for one-child family, 658,607 won for two-children family, and 546,309 won for three-children family. Using per capita method by expenditure items, it is estimated that monthly average expenditure per child is 950,677 won for one-child family, 804,092 won for two-children family, and 635,974 won for three-children family. The cost of children rise as the age of the youngest child increases. When the child is educated in high school, the cost is the highest. Among the expenditure items, the educational expenditure has the largest proportion of the household spending and the proportion increases when the age of the youngest increases. This study reveals that the economic scale of expenditure for child exists and the additional cost for rearing children decreases as the number of children increases. The economy of scale is larger for low-income families, the families residing in rural areas and those whose mother has a bachelor degree. High-income families spend more on their children compared to low-income family. Families who live in urban areas spend more on their children compared to those in rural areas. And if the mother has bachelor degree, the family spend more on their children compared to others who do not. The findings of this study show that expenditure for children is significantly large in Korea. The burden of child cost may be a serious obstacle to overcome low fertility. The policy to reduce burden of child cost should be continued and should have a priority as an investment for future aging society. This study suggests the followings. First, it is needed to reach a consensus on what is a relevant level of supports for children within the society. Second, the policy to reduce cost of raising children should be conducted as a integrated family policy including allowances, childcare services, and parental leave. Third, the policy should be designed to have universal supports for families rearing children and targeted at needed families simultaneously.