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The impact of home production on economic inequality in Germany

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  • Joachim Frick

    ()

  • Markus Grabka
  • Olaf Groh-Samberg

    ()

Abstract

Using representative income and time-use data from the German Socio-Economic Panel, we estimate non-monetary income advantages arising from home production and analyze their impact on economic inequality. As an alternative to existing measures, we propose a predicted wage approach that relaxes some of the strong assumptions underlying both the standard opportunity cost approach and the housekeeper wage approach. We also propose a method of adjusting the number of hours spent on home production to reduce the bias arising from multi-tasking and joint production in time-use data. Sensitivity analyses comparing results among different approaches provide indications of method effects. Although this study supports the evidence that considering home production leads to a reduction in inequality, we show that the size of this effect differs according to the variations in the mean and distribution of the estimated monetary value of home production across the three approaches. This finding underscores the need for a harmonized approach in cross-national comparative research. Copyright Springer-Verlag 2012

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Bibliographic Info

Article provided by Springer in its journal Empirical Economics.

Volume (Year): 43 (2012)
Issue (Month): 3 (December)
Pages: 1143-1169

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Handle: RePEc:spr:empeco:v:43:y:2012:i:3:p:1143-1169

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Keywords: Home production; Non-cash incomes; Economic inequality; SOEP; Time use; D31; D13; I32;

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References

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  1. W. Keith Bryant & Hyojin Kang & Cathleen D. Zick & Anna Y. Chan, 2004. "Measuring Housework in Time Use Surveys," Review of Economics of the Household, Springer, vol. 2(1), pages 23-47, 03.
  2. Duncan Ironmonger, 1996. "Counting outputs, capital inputs and caring labor: Estimating gross household product," Feminist Economics, Taylor & Francis Journals, vol. 2(3), pages 37-64.
  3. Daniel Hallberg & Anders Klevmarken, 2003. "Time for children: A study of parent's time allocation," Journal of Population Economics, Springer, vol. 16(2), pages 205-226, 05.
  4. Smeeding, Timothy M & Weinberg, Daniel H, 2001. "Toward a Uniform Definition of Household Income," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(1), pages 1-24, March.
  5. Iulie Aslaksen & Charlotte Koren, 1996. "Unpaid household work and the distribution of extended income: The Norwegian experience," Feminist Economics, Taylor & Francis Journals, vol. 2(3), pages 65-80.
  6. Michael C. Burda & Daniel S. Hamermesh, 2009. "Evidence on Unemployment, Market Work and Household Production," SFB 649 Discussion Papers SFB649DP2009-043, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  7. Frazis, Harley & Stewart, Jay, 2009. "How Does Household Production Affect Measured Income Inequality?," IZA Discussion Papers 4048, Institute for the Study of Labor (IZA).
  8. Cathleen Zick & W. Bryant & Sivithee Srisukhumbowornchai, 2008. "Does housework matter anymore? The shifting impact of housework on economic inequality," Review of Economics of the Household, Springer, vol. 6(1), pages 1-28, March.
  9. Bonke, Jens, 1992. "Distribution of Economic Resources: Implications of Including Household Production," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 38(3), pages 281-93, September.
  10. Marcel Kerkhofs & Peter Kooreman, 2003. "Identification and estimation of a class of household production models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(3), pages 337-369.
  11. repec:ese:emodwp:em7-09 is not listed on IDEAS
  12. Joachim R. Frick & Markus M. Grabka & Olaf Groh-Samberg, 2010. "Economic Gains from Educational Transfers in Kind in Germany," Journal of Income Distribution, Journal of Income Distribution, vol. 19(3-4), pages 17-40, September.
  13. Jenkins, Stephen P & O'Leary, Nigel C, 1996. "Household Income Plus Household Production: The Distribution of Extended Income in the U.K," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(4), pages 401-19, December.
  14. Harley Frazis & Jay Stewart, 2006. "How Does Household Production Affect Earnings Inequality? Evidence from the American Time Use Survey," Working Papers 393, U.S. Bureau of Labor Statistics.
  15. Joachim R. Frick & Jan Goebel & Markus M. Grabka, 2007. "Assessing the Distributional Impact of "Imputed Rent" and "Non-cash Employee Income" in Microdata: Case Studies Based on EU-SILC (2004) and SOEP (2002)," SOEPpapers on Multidisciplinary Panel Data Research 2, DIW Berlin, The German Socio-Economic Panel (SOEP).
  16. Gronau, Reuben, 1980. "Home Production-A Forgotten Industry," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 408-16, August.
  17. Graham, John W & Green, Carole A, 1984. "Estimating the Parameters of a Household Production Function with Joint Products," The Review of Economics and Statistics, MIT Press, vol. 66(2), pages 277-82, May.
  18. Burda, Michael C & Hamermesh, Daniel S., 2009. "Unemployment, Market Work and Household Production," CEPR Discussion Papers 7166, C.E.P.R. Discussion Papers.
  19. Peter Gottschalk & Susan E. Mayer, 1997. "Changes in Home Production and Trends in Economic Inequality," Boston College Working Papers in Economics 382, Boston College Department of Economics.
  20. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
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Citations

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Cited by:
  1. Joachim R. Frick & Kristina Krell, 2010. "Measuring Income in Household Panel Surveys for Germany: A Comparison of EU-SILC and SOEP," SOEPpapers on Multidisciplinary Panel Data Research 265, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Joachim R. Frick & Kristina Krell, 2009. "Einkommensmessungen in Haushaltspanelstudien für Deutschland: ein Vergleich von EU-SILC und SOEP," SOEPpapers on Multidisciplinary Panel Data Research 237, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Luca Marchiori & Olivier Pierrard, 2012. "LOLA 2.0: Luxembourg OverLapping generation model for policy Analysis," BCL working papers 76, Central Bank of Luxembourg.

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