Relative Cost of Child Rearing for Iranian Households: Estimates of Child Equivalence Scales for Iran

Document Type : Original Article

Authors

1 Department of Economics, Faculty of Economics and Political Science, Shahid Beheshti University

2 Professor of Economics, University of Dundee

Abstract

Following a recent speech (in July 2012) by the Iranian Supreme Leader in which he criticized the existing birth-control programs in Iran and warned that such programmers would lead Iran to facing an aging population, the health authorities were reported to have started cutting family planning budgets. It was also reported that the Iranian Parliament was considering the amendment of the 1993 family planning law which limited public benefits for larger families and called for education about family planning in schools. If they succeed, these attempts will bring about a baby-boom in Iran.  On the 20th of February 2013 the Iranian Parliament amended this law thus removing all the restrictions which were previously placed for having children[1]. But a baby-boom policy ought to be assessed, in advance, against a number of yardsticks prominent amongst which is the relative cost of child rearing to households. In this paper we argue that the existing child benefit system in Iran, which disregards a number of crucial features of households, is inadequate for delivering a fair outcome, especially in the event that a baby-boom policy succeeds. One way to overcome this inadequacy is to use, as basis for compensating households for the expenses of an additional child, the equivalence scales principle. We use Iran’s Household Expenditure and Income Surveys datasets for 1984-2007 (compiled annually by the Statistical Centre of Iran) to estimate the child equivalence scales ‒ based on both Engle’s and Rothbarth’s methodology ‒ for different household types. We find that households’ main features (size and geographic location) as well as their demographic characteristics such as the number of existing children and their age influence the cost of a new child. He compensation profile that emerges from our estimates suggests the need for redesigning Iran’s child benefit system.

Keywords

References

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Journal of Economics and Modelling
Volume 5, 19-20
March 2015
Pages 13-34

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