Effect of Wage on Household Size

Abstract

In this analysis, the relationship between household size and wage is investigated. The measure of household size that is used is the number of dependents, because of the economic relationship associated with wage and number of dependents. In the United States, there is an increasing opportunity cost associated with an increasing number of dependents. Time must be allocated between household production, which increases with increasing dependents, and hours worked in the labor force. This analysis attempts to derive the relationship between wage and number of dependents, investigating the proposed negative relationship between income level and household size.