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Inferring Inequality with Home Production

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  • Boerma, Job
  • Karabarbounis, Loukas

Abstract

We revisit the causes, welfare consequences, and policy implications of the dispersion in households' labor market outcomes using a model with uninsurable risk, incomplete asset markets, and home production. Accounting for home production amplifies welfare-based differences across households meaning that inequality is larger than we thought. Home production does not offset differences that originate in the market sector because productivity differences in the home sector are significant and the time input in home production does not covary with consumption expenditures and wages in the cross section of households. The optimal tax system should feature more progressivity taking into account home production.

Suggested Citation

  • Boerma, Job & Karabarbounis, Loukas, 2019. "Inferring Inequality with Home Production," CEPR Discussion Papers 13554, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:13554
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    1. Inferring Inequality with Home Production
      by Christian Zimmermann in NEP-DGE blog on 2018-01-11 22:56:22

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    3. Boerma, Job & Karabarbounis, Loukas, 2020. "Labor market trends and the changing value of time," Journal of Economic Dynamics and Control, Elsevier, vol. 115(C).
    4. Alexander Bick & Adam Blandin & Richard Rogerson, 2019. "Hours and Wages," 2019 Meeting Papers 261, Society for Economic Dynamics.
    5. Bellmann, Lutz & Hübler, Olaf, 2020. "Job Satisfaction and Work-Life Balance: Differences between Homework and Work at the Workplace of the Company," IZA Discussion Papers 13504, Institute of Labor Economics (IZA).
    6. Theloudis, Alexandros, 2021. "Consumption inequality across heterogeneous families," European Economic Review, Elsevier, vol. 136(C).
    7. Chang, Yongsung & Kim, Sun-Bin & Kwon, Kyooho & Rogerson, Richard, 2020. "Cross-sectional and aggregate labor supply," European Economic Review, Elsevier, vol. 126(C).
    8. Enghin Atalay, 2022. "A Twenty-First Century of Solitude? Time Alone and Together in the United States," Working Papers 22-11, Federal Reserve Bank of Philadelphia.
    9. Masao Fukui & Emi Nakamura & Jón Steinsson, 2018. "Women, Wealth Effects, and Slow Recoveries," NBER Working Papers 25311, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Consumption; Home Production; inequality; Labor Supply;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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