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Children, Time Allocation, and Consumption Insurance

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  • Richard Blundell
  • Luigi Pistaferri
  • Itay Saporta-Eksten

Abstract

We study choices of households deciding on consumption and allocation of spouses' time to work, leisure, and child care. With uncertainty, the allocation of goods and time over the life cycle also serves the purpose of smoothing marginal utility in response to shocks. Combining data on consumption, wages, hours of work, and time spent with children, we compute the sensitivity of consumption and time allocation to transitory and permanent wage shocks. We find that family labor supply responses depend on three counteracting forces: complementarity of leisure time, substitutability of time in the production of child services, and added worker effects.

Suggested Citation

  • Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2018. "Children, Time Allocation, and Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 126(S1), pages 73-115.
  • Handle: RePEc:ucp:jpolec:doi:10.1086/698752
    DOI: 10.1086/698752
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    Cited by:

    1. Andrea Ichino & Martin Olsson & Barbara Petrongolo & Peter Skogman Thoursie, 2019. "Economic incentives, home production and gender identity norms," CEP Discussion Papers dp1626, Centre for Economic Performance, LSE.
    2. Mette Ejrnæs & Thomas H. Jørgensen, 2020. "Family planning in a life‐cycle model with income risk," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(5), pages 567-586, August.
    3. de la Croix, David & Pommeret, Aude, 2021. "Childbearing postponement, its option value, and the biological clock," Journal of Economic Theory, Elsevier, vol. 193(C).
    4. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2018. "Children, Time Allocation, and Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 126(S1), pages 73-115.
    5. Gathmann, Christina & Huttunen, Kristiina & Jernström, Laura & Sääksvuori, Lauri & Stitzing, Robin, 2020. "In Sickness and in Health: Job Displacement and Health Spillovers in Couples," IZA Discussion Papers 13329, Institute of Labor Economics (IZA).
    6. Martin Halla & Julia Schmieder & Andrea Weber, 2020. "Job Displacement, Family Dynamics, and Spousal Labor Supply," American Economic Journal: Applied Economics, American Economic Association, vol. 12(4), pages 253-287, October.
    7. Neil Amin‐Smith & Orazio P. Attanasio, 2020. "Consumption and Wage Inequality in the US: The Dynamics of the Last Three Decades," Fiscal Studies, John Wiley & Sons, vol. 41(1), pages 7-38, March.
    8. Biddle, Jeff E. & Hamermesh, Daniel S., 2020. "Income, wages and household production theory," Economics Letters, Elsevier, vol. 192(C).
    9. Kohei Kubota, 2021. "Partial insurance in Japan," The Japanese Economic Review, Springer, vol. 72(2), pages 299-328, April.
    10. Huihui LI, 2020. "Time Allocation to Housework and Childcare in Japan," Discussion Papers 2023, Graduate School of Economics, Kobe University.
    11. Alexandros Theloudis, 2017. "Consumption inequality across heterogeneous families," Working Papers 451, ECINEQ, Society for the Study of Economic Inequality.
    12. Hassani Nezhad, Lena, 2020. "Female Employment and Childcare," IZA Discussion Papers 13839, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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