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Household Labor Supply and Home Services in a General-Equilibrium Model with Heterogeneous Agents

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  • Christian Bredemeier

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  • Falko Jüßen

Abstract

We propose a new explanation for differences and changes in labor supply by gender and marital status, and in particular for the increase in married women’s labor supply over time.We argue that this increase as well as the relative constancy of other groups’ hours are optimal reactions to outsourcing labor in home production becoming more attractive to households over time.To investigate this hypothesis,we incorporate heterogeneous agents into a household model of labor supply and allow agents to trade home labor. This model can generate the observed patterns in US labor supply by gender and marital status as a reaction to declining frictions on the market for home services.We provide an accounting exercise to highlight the role of alternative explanations for the rise in hours in a model where home labor is tradable.

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Bibliographic Info

Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0091.

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Length: 52 pages
Date of creation: Mar 2009
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Handle: RePEc:rwi:repape:0091

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Keywords: Labor supply; gender; home production; heterogeneity;

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