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Household Production, Leisure, and Living Standards

In: Measuring Economic Sustainability and Progress

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  • Paul Schreyer
  • W. Erwin Diewert

Abstract

Household production is an important non-market activity and the empirical literature has developed different methods towards valuing household production without, however, providing a rigorous theoretical foundation for the various approaches. We follow the literature spawned by Becker (1965) and develop a model of the household as a producer and consumer that provides a theoretical justification for the two main approaches towards valuing labour in household production, the replacement cost approach and the opportunity cost approach. We provide a justification for the replacement cost approach as a way of valuing labour input into own-account production of households but show also that in general this is an incomplete measure of full consumption. We further develop a cost-of-living index for full consumption and full household income. The consequences of the theoretical model are illustrated by a cross-country comparison, using the data by Ahmad and Koh (2011).
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Suggested Citation

  • Paul Schreyer & W. Erwin Diewert, 2014. "Household Production, Leisure, and Living Standards," NBER Chapters, in: Measuring Economic Sustainability and Progress, pages 89-114, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:12826
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    Cited by:

    1. Diewert, Erwin & FOX, Kevin J. & Paul Schreyer, 2017. "The Allocation and Valuation of Time," Microeconomics.ca working papers erwin_diewert-2017-5, Vancouver School of Economics, revised 04 May 2017.
    2. Paul Schreyer, 2021. "Framing Measurement Beyond GDP," CEPA Working Papers Series WP172021, School of Economics, University of Queensland, Australia.
    3. Bridgman, Benjamin & Duernecker, Georg & Herrendorf, Berthold, 2018. "Structural transformation, marketization, and household production around the world," Journal of Development Economics, Elsevier, vol. 133(C), pages 102-126.
    4. You, Wen & Davis, George C. & Yang, Jinyang, 2022. "Viewpoint: An assessment of recent SNAP benefit increases allowing for money and time variability," Food Policy, Elsevier, vol. 106(C).
    5. Bridgman, Benjamin, 2016. "Home productivity," Journal of Economic Dynamics and Control, Elsevier, vol. 71(C), pages 60-76.
    6. Georg Duernecker & Berthold Herrendorf, 2015. "On the Allocation of Time - A Quantitative Analysis of the U.S. and France," CESifo Working Paper Series 5475, CESifo.
    7. Diewert, W. Erwin, 2017. "Productivity Measurement in the Public Sector: Theory and Practice," Microeconomics.ca working papers erwin_diewert-2017-1, Vancouver School of Economics, revised 02 Feb 2017.
    8. Yanliang Yang & George C Davis & Wen You, 2019. "Measuring Food Expenditure Poverty in SNAP Populations: Some Extensions with an Application to the American Recovery and Reinvestment Act," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(1), pages 133-152, March.
    9. Davis, George C., 2021. "The Implicit Hidden Reductions in the SNAP Benefit Formula: A Unifying Framework for Analysis and Policy Debates," 2021 Annual Meeting, August 1-3, Austin, Texas 313993, Agricultural and Applied Economics Association.
    10. T. Heikkinen, 2015. "A spatial equilibrium model of local nonmarket production with capacity constraints," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(4), pages 337-361, December.
    11. Nadim Ahmad & Paul Schreyer, 2016. "Are GDP and Productivity Up to the Challenges of the Digital Economy?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 30, pages 4-27, Spring.

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    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts

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