# **5.1.2 Household Structure**

Across Malawi, the average household size is 4.58 and the dependency ratio, which is largely driven by the presence of children, is 1.16. This ratio is higher in rural areas than urban areas: 1.22 versus 0.88.<sup>53</sup> The larger share of children in rural households is also present at the tails of the distribution. While the population share of childless households is 18% in rural areas, this share is higher in urban areas, 24% (see panels A1 and B1 in Table 10). Further, while the population of households with at least four children is 22% in the rural areas, this share is 15% in urban areas. Indeed, the proportion of households with a dependency ratio higher than 1 is 55% in rural areas, while this figure is 44% in urban areas.

We investigate the CIW conditioning on the number of children living in the household. Panel B2 of Table 10 shows that in urban areas, households with a dependency ratio lower than 1 have clearly higher average consumption and income, respectively, by a factor of 1.38 and 1.89, compared with households with a dependency ratio above 1. This and the lack of a positive relationship between consumption/income and the number of children in urban areas suggests that children represent, on average, a substantial consumption/income cost to urban households.

In contrast, in rural areas, where the vast majority of the population lives, we find that household size is positively related to income (see panel A2 of Table 10). In the same direction, mean consumption and income are similar between households with dependency ratios above and below 1 in rural areas. Our facts suggest that children, taken at face value, are not necessarily a burden on rural household consumption/income. Indeed, children might be important in generating income, helping with farm activities from early ages, and also serving as an insurance mechanism for the short run through labor-supply adjustments (see Beegle et al. (2006) and Jacoby and Skoufias (1997)). Finally, in the environments that we study where wealth accumulation is difficult, children can be viewed as a viable form of asset that substitutes for social security as proposed in Boldrin and Jones (2002) and more recently pursued in Banerjee et al. (2014).<sup>54</sup>

> 53ISA household rosters provide individual demographic information about all members of the household. In particular, the relationship between each member of the household and the household head is identified. Relatives who are members of the household include children (i.e., son/daughter-in-law, niece/nephew, grandchildren), wife/husband, father/mother, father/mother-in-law, brother/sister, brother/sister-in-law, and grandfather/grandmother. Non-relatives who are members of the household include servants and lodgers living in the household. We are interested in household size (the sum of all members), as well as the household structure by age and sex groups. We define the household-level dependency ratio as the number of dependants, that is, children younger than 15 years of age in the household, _nc_ = _n_<sup>_own_</sup> _c_<sup>_−in_</sup> + _nc_<sup>_other−in_</sup> , and adults older than 52 years of age (average life expectancy), over the number of working-age adults between 15 and 52 years of age. The household size that we obtain for the 2010 Malawi ISA is similar to the one obtained from the nationally representative 2010 Demographic and Health Survey for Malawi, 4.72. If we include all individuals available on the household roster who do not necessarily belong to the household, we obtain a household size of 5.64.

> 54An alternative explanation that merits further investigation is whether larger households are allocated more

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