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Valuing Lost Home Production for Dual-Earner Couples

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  • John Laitner

    (University of Michigan)

  • Chris House

    (University of Michigan)

  • Dmitri Stolyarov

    (University of Michigan)

Abstract

Economists’ principal tool for studying household behavioral responses to changes in tax and other government policies, and the magnitude and determinants of private saving, is the life—cycle model. The purpose of this paper is to attempt to incorporate into that model one of the most conspicuous changes in the U.S. economy in the last 50 years, the rise in labor market participation for married women. The increased presence of married women in the labor force has obvious benefits: women now earn much more income than they did in the past. On the other hand, working women presumably spend less time doing housework and other types of home production, and the forgone value of time at home reduces the net benefit of their work in the market. Conventional accounts do not provide measurements of the costs of lost home production, but we attempt to use comparisons of household net worth at retirement to deduce valuations indirectly. This paper modifies a standard life—cycle model to include women’s labor supply decisions, estimates key parameters of the new specification, and attempts to assess the significance of rising female labor market participation for aggregate national saving in the U.S. Using panel data from the Health and Retirement Study, we find that the difference between measured labor market earnings for married women and earnings net of the value of lost home production seems moderately small – about 30 percent – and that the corresponding long—run effect on the overall rate of private saving is minor.

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Bibliographic Info

Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp097.

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Length: 30 pages
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:mrr:papers:wp097

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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. How much did marketization of home production contribute to GDP?
    by Economic Logician in Economic Logic on 2008-09-03 16:05:00
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Cited by:
  1. Gorodnichenko, Yuriy & Song, Jae & Stolyarov, Dmitriy, 2013. "Macroeconomic Determinants of Retirement Timing," IZA Discussion Papers 7744, Institute for the Study of Labor (IZA).
  2. Bart Hobijn & Charles Steindel, 2009. "Do alternative measures of GDP affect its interpretation?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 15(Nov).
  3. Christopher House & John Laitner & Dmitriy Stolyarov, 2006. "Home Production by Dual Earner Couples and Consumption During Retirement," Working Papers wp143, University of Michigan, Michigan Retirement Research Center.
  4. Laitner, John & Silverman, Dan, 2012. "Consumption, retirement and social security: Evaluating the efficiency of reform that encourages longer careers," Journal of Public Economics, Elsevier, vol. 96(7-8), pages 615-634.
  5. Christopher House & John Laitner & Dmitriy Stolyarov, 2008. "Valuing Lost Home Production Of Dual Earner Couples," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 701-736, 05.
  6. S. Boragan Aruoba & Morris A. Davis & Randall Wright, 2012. "Homework in Monetary Economics: Inflation, Home Production, and the Production of Homes," NBER Working Papers 18276, National Bureau of Economic Research, Inc.
  7. Seonglim Lee & Jinkook Lee & Yunhee Chang, 2014. "Is Dual Income Costly for Married Couples? An Analysis of Household Expenditures," Journal of Family and Economic Issues, Springer, vol. 35(2), pages 161-177, June.

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