What Does It Cost to Raise a Child?

How economists estimate the cost of raising a child, including direct spending and the often larger cost of time and lost earnings.

Raising a child is one of the largest financial commitments most families make. Estimating its cost helps families plan, and helps governments design benefits and tax credits.

Direct costs

The most visible costs are direct costs: housing, food, clothing, healthcare, education and childcare. In a well-known estimate, the U.S. Department of Agriculture calculated in 2017 that a middle-income married couple would spend about 233,610 dollars to raise a child born in 2015 to age 17. That figure did not include college. Housing was the largest single item, followed by food and childcare and education.

Costs vary enormously by country. Where governments provide free healthcare, free schooling and subsidised childcare, families pay far less directly.

The hidden cost: time

Economists stress that the largest cost is often not money spent but time spent. Caring for a child takes hours that could otherwise go to paid work, rest or study. This is an opportunity cost.

Research across many countries finds a motherhood penalty: women’s earnings typically fall sharply after the birth of their first child and do not fully recover, while men’s earnings are largely unaffected. A widely cited study of Denmark by Henrik Kleven and co-authors found that about ten years after the first child, women’s earnings were around 20 percent lower than they would otherwise have been.

Two ways to count

Imagine a parent who earns 40,000 dollars a year cuts back to part-time work for five years, earning 20,000 dollars a year instead. The direct spending on the child might be 15,000 dollars a year. But the lost income is 20,000 dollars a year, plus slower career progress afterwards. The time cost can be larger than everything the family buys.

Economies of scale

The second and third children usually cost less each than the first. Clothes, toys and rooms can be shared, and parents already have the equipment and experience. Estimates often find that each additional child adds a smaller amount than the one before.

Counting only the shopping bill

Estimates that only add up what families spend miss the biggest cost for many parents: the paid work and career progress they give up. Policies like parental leave and affordable childcare are largely aimed at reducing this hidden cost.

Key takeaways

Direct costs include housing, food, clothing, healthcare, education and childcare.
A 2017 U.S. government estimate put direct costs for a middle-income family at about 233,610 dollars to age 17.
The time and lost earnings of parents, especially mothers, is often the largest cost.
Additional children usually cost less each than the first, thanks to economies of scale.