Household Production, Leisure and Living Standards
In: Measuring Economic Sustainability and Progress
AbstractHousehold 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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Other versions of this item:
- Diewert, Erwin & Schreyer, Paul, 2013. "Household Production, Leisure and Living Standards," Economics working papers erwin_diewert-2013-15, Vancouver School of Economics, revised 03 Apr 2013.
- 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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- Alan B. Krueger & Andreas I. Mueller, 2012.
"The Lot Of The Unemployed: A Time Use Perspective,"
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- Krueger, Alan B. & Mueller, Andreas I., 2008. "The Lot of the Unemployed: A Time Use Perspective," IZA Discussion Papers 3490, Institute for the Study of Labor (IZA).
- Nadim Ahmad & Seung-Hee Koh, 2011. "Incorporating Estimates of Household Production of Non-Market Services into International Comparisons of Material Well-Being," OECD Statistics Working Papers 2011/7, OECD Publishing.
- Robert E. Lipsey & Helen Stone Tice, 1989. "The Measurement of Saving, Investment, and Wealth," NBER Books, National Bureau of Economic Research, Inc, number lips89-1, October.
- Pollak, Robert A., 1989. "The Theory of the Cost-of-Living Index," OUP Catalogue, Oxford University Press, number 9780195058703.
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