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How Does Household Production Affect Earnings Inequality? Evidence from the American Time Use Survey

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Author Info
Harley Frazis () (U.S. Bureau of Labor Statistics)
Jay Stewart () (U.S. Bureau of Labor Statistics)
Abstract

Although income inequality has been studied extensively, relatively little attention has been paid to the role of household production. Economic theory predicts that households with less money income will produce more goods at home. Thus extended income, which includes the value of household production, should be more equally distributed than money income. We find this to be true, but not for the reason predicted by theory. Virtually all of the decline in measured inequality when moving from money income to extended income is due to the addition of a large constant--the average value of household production--to money income. This result is robust to alternative assumptions that one might make when estimating the value of household production.

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Paper provided by U.S. Bureau of Labor Statistics in its series Working Papers with number 393.

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Length: 27 pages
Date of creation: May 2006
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Handle: RePEc:bls:wpaper:ec060050

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Related research
Keywords: Inequality; Household Production; Time Use;

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Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bonke, Jens, 1992. "Distribution of Economic Resources: Implications of Including Household Production," Review of Income and Wealth, Blackwell Publishing, vol. 38(3), pages 281-93, September.
  2. Andrews, Donald W. K., 1991. "Asymptotic optimality of generalized CL, cross-validation, and generalized cross-validation in regression with heteroskedastic errors," Journal of Econometrics, Elsevier, vol. 47(2-3), pages 359-377, February. [Downloadable!] (restricted)
  3. Johnson, David & Shipp, Stephanie, 1997. "Trends in Inequality Using Consumption-Expenditures: The U.S. from 1960 to 1993," Review of Income and Wealth, Blackwell Publishing, vol. 43(2), pages 133-52, June.
  4. Dirk Kreuger & Fabrizio Perri, 2002. "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory," Working Papers 02-15, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
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  5. Reuben Gronau & R. Layard, . "Home Production - A Survey," University of Chicago - Population Research Center 85-2, Chicago - Population Research Center.
  6. 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. [Downloadable!]
  7. Brooks Pierce, 2001. "Compensation Inequality," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1493-1525, November. [Downloadable!] (restricted)
  8. 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, Blackwell Publishing, vol. 42(4), pages 401-19, December.
  9. Jens Bonke & Mette Deding & Mette Lausten, 2009. "Time and Money," Journal of Happiness Studies, Springer, vol. 10(2), pages 113-131, April. [Downloadable!] (restricted)
  10. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June. [Downloadable!] (restricted)
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