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Abstract:

Economic literature suggests adopting the equivalence scale in order to calculate the private monetary cost of a child. This estimation is based upon controversial assumptions about exogeneity of fertility choice, identical preferences and possibility of welfare comparisons. In this paper we pro- pose a different approach for estimating the cost of children. This method does not require household welfare comparisons and assumptions about preferences. Using the 1997 Italian Household Budget survey, we estimate the increase in the total expenditure caused by the presence of an additional child for households with equal income and socio-economic characteristics. The monthly marginal cost is equal to 9% for households with average income.