Recent years witnessed a flourishing of literature on the implication of shifts from home- production to market production on the macro economy, and in particular, the real business cycle. This literature employs calibration techniques to emulate the fluctuations in market output, labor and capital inputs and productivity over the business cycle, assuming a representative consumer and using stylized parameters of the substitution elasticity between home and market goods, and of the home production function. This paper argues that the parameters used in this literature cannot be verified empirically because of econometric identification problems. Furthermore, using data from the late 90s from transition Russia, it is argued that one cannot capture the fluctuation between the home and the market by using a representative consumer, since there is a distinct difference between males and females in their reaction to loss of employment: men shift most of the time released from market work to leisure while women divide it almost equally between work at home and leisure. Finally it is shown that the switch from a controlled economy to a market economy resulted in significant increase in home productivity and an increase in the free time enjoyed by both Russian men and women.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
12287.
Length: Date of creation: Jun 2006 Date of revision: Handle: RePEc:nbr:nberwo:12287
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Find related papers by JEL classification: D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply P36 - Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health, Education, Welfare, and Poverty
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