Children ' s Pay Envelopes and the Family Purse : The Impact of Children ' s Income on Household Expenditures

In the United States a century ago, children's labor earnings were considered the property of their parents. Working children turned over most of the contents their pay envelopes to their parents. Accordingly, surveys of household budgets conducted during the period, as well as most subsequent analyses of these surveys by historians, treat children's income as simply part of family income. But did a dollar of income from children have the same impact on household expenditures as did a dollar of income from the father? Using data from the Bureau of Labor Statistics Cost of Living Survey 1917-1919, this paper shows that earnings from children altered intrahousehold resource allocations. Holding total expenditures per capita constant, increases in the share of household income brought in by children ages 12 to 16 decreased expenditures on the father’s clothing and the clothing of younger children in the household but increased expenditures on food. This is a preliminary draft. Please do not cite without permission. Claudia Goldin and Martha Olney generously provided supplementary data on the occupations reported in the BLS Cost of Living Survey. Joseph Altonji, Joseph Ferrie, Timothy Guinnane, Bruce Meyer, Joel Mokyr, and Christopher Udry provided helpful comments and suggestions. The author also benefited from the comments on earlier versions of the paper provided by seminar participants at Northwestern, Washington University, and NBER/DAE Summer Institute. All errors and omissions are the responsibility of the author.