Children’s Time Allocation, Heterogeneity, and Simultaneous Decisions

This paper uses a longitudinal survey from the Philippines with detailed information on children's time use to analyse the effects of economic factors on children's time allocation and the trade-offs between time uses. The method takes account of the simultaneity of time use decisions by allowing for correlation of individual residuals across time uses and of unobservable family heterogeneity by including household fixed effects. There are statistically significant correlations between individual residuals and between household fixed effects when it comes to hours spent working and in school, but this correlation is substantially smaller than one. The individual level correlations between the different time uses are generally small. Including household heterogeneity leads to substantial changes in the estimated effects of many of the important explanatory variables, whereas correlation of residuals changes mainly the significance of the estimated parameter