Review of Economics of the Household

, Volume 3, Issue 1, pp 75–89 | Cite as

Consumption and Income Around the Time of Births



This study examines households’ financial situation around the time of births, and in particular households’ consumption behavior, using a panel of Dutch households over the period 1987–1993. Descriptive statistics show that with the arrival of children households, on average, experience a fall in income, reduce consumption and save less. The empirical results show that women leaving employment after having given birth is the principle channel through which children reduce household income. This reduction in income causes consumption to decrease with the arrival of children. We find that around the time of births a 1 percent reduction in household income yields a 0.62 percent reduction in household consumption.


panel data consumption lifecycle model fertility 


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Copyright information

© Springer Science+Business Media, Inc. 2005

Authors and Affiliations

  1. 1.Department of Economics (Room B933)Tilburg UniversityTilburgThe Netherlands

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