The effect of a newborn on Spanish households' expenditure

Abstract

This article aims to carry out an analysis of the effects of a newborn on Spanish households expenditure in 2014 and 2015. A standard difference-in-differences (DID) estimator would then compare the change in expenditure of those households that have a child in the second period with those that do not. However, both groups of households are different in characteristics that affect household expenditure. The semi-parametric difference-in-differences (SDID) estimator proposed by Abadie (2005) provides a simple two-step procedure to account for non-parallel trends and has been implemented into Stata software by Houngbedji (2016). Our results show that there is a positive effect on the allocation of income that households spend on raising children.