The economic consequences of the transition to parenthood

Wendy Sigle-Rushton, London School of Economics and Political Science (LSE)

This paper examines the economic well-being of households both before and after having a child. Although the focus is predominantly on the transition from a childless household to one with children, the effects of higher order births are considered as well. Using harmonized panel data from the European Community Household Panel, the change in economic circumstances of new parents can be compared across six European countries. These include the Netherlands, France, Italy, Spain, Germany and the United Kingdom. Exploiting the longitudinal aspect of these data, it is possible to assess whether parenthood is selective of higher or lower income families and whether the importance of selection differs cross-nationally. If parenthood is selective of higher (lower) income families, cross-sectional comparisons by family type will underestimate (overestimate) the effects of parenthood on economic well-being.