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Household production, time allocation, and welfare in Peru

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  • Dagsvik, John
  • Aaberge, Rolf

Abstract

This paper uses the Peruvian Living Standard Survey (PLSS) data to analyze: (a) inequality in the distribution of income; (b) labor market participation of men and women and the variations in hours of work; and (c) the relationship between variations in labor supply and income inequality. It uses a decomposing method to analyze income inequality and utilizes a structural neo-classical model to analyze household production, consumption, time allocation and welfare. The purpose is to study the effect on production, consumption, and time allocation of changes in education and wage rates. Most of the available information on economic inequality in developing countries refers to the distribution of income among earners. Although this information constitutes an important element for understanding the labor market and the related distribution of income, it is less helpful in the analysis of inequality as a welfare issue. A more relevant indicator of welfare is per capita household income or consumption. This paper uses this indicator in an analysis of economic inequality. The methodological approach is based on a summary measure of inequality which is closely related to the Gini coefficient. The essential difference is that the proposed measure of inequality gives more weight than the Gini coefficient to transfers related to the very poor.

Suggested Citation

  • Dagsvik, John & Aaberge, Rolf, 1990. "Household production, time allocation, and welfare in Peru," Policy Research Working Paper Series 503, The World Bank.
    • Handle: RePEc:wbk:wbrwps:503
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    References listed on IDEAS

    as
    1. Deaton, Angus S & Muellbauer, John, 1986. "On Measuring Child Costs: With Applications to Poor Countries," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 720-744, August.
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