Revisiting the role of home production in life-cycle labor supply
AbstractThis paper revisits the argument, posed by Rupert, Rogerson, and Wright (2000), that estimates of the intertemporal elasticity of labor supply that do not account for home production are biased downward. The author uses the American Time Use Survey, a richer and more comprehensive data source than those used previously, to replicate their analysis, but he also explores how other factors interact with household and market work hours to affect the elasticity of labor supply. An exact replication of their analysis yields an elasticity of about 0.4, somewhat larger than previously estimated. Once the author accounts for demographics and household characteristics, particularly the number of children in the household, the estimate is essentially zero. This is true even when accommodating extensive-margin labor adjustments. Households' biological inability to smooth childbearing over the life cycle and the resulting income effect on market work hours drive this result.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 10-3.
Date of creation: 2010
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-16 (All new papers)
- NEP-DGE-2010-01-16 (Dynamic General Equilibrium)
- NEP-LAB-2010-01-16 (Labour Economics)
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