ECN 340 Chapter 6: ECN340– Chapter 6.docx
17 Feb 2014
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Document Summary
In the past insurance not well developed, therefore, children were an insurance policy: why can children be a bad insurance policy, children can be an important source of labor especially is they are less expensive than machines, parents buy immortality with children, some parents live through their children; they get vicarious satisfaction, parents that get a great amount of benefit from children will produce more o them (ceteris paribus) Cost of children: giving birth (pain, food, clothing, shelter, education, entertainment, medical expenses, insurance, transportation, emotional drain, time of the parents (most important input to having children) Income (ceteris paribus: overtime, preferences may turn from quantity to quality, quality requires more investment, anything that brings down the cost of rearing children will increase the quantity demanded, drop in cost could be due to technology or decreasing price of inputs to raise children, government policy can change costs through exemptions from taxes.
