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Labor Market Trends and the Changing Value of Time

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  • Job Boerma
  • Loukas Karabarbounis

Abstract

During the past two decades, households experienced increases in their average wages and expenditures alongside with divergent trends in their wages, expenditures, and time allocation. We develop a model with incomplete asset markets and household heterogeneity in market and home technologies and preferences to account for these labor market trends and assess their welfare consequences. Using micro data on expenditures and time use, we identify the sources of heterogeneity across households, document how these sources have changed over time, and perform counterfactual analyses. Given the observed increase in leisure expenditures relative to leisure time and the complementarity of these inputs in leisure technology, we infer a significant increase in the average productivity of time spent on leisure. The increasing productivity of leisure time generates significant welfare gains for the average household and moderates negative welfare effects from the rising dispersion of expenditures and time allocation across households.

Suggested Citation

  • Job Boerma & Loukas Karabarbounis, 2019. "Labor Market Trends and the Changing Value of Time," Working Papers 763, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmwp:763
    DOI: 10.21034/wp.763
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    Cited by:

    1. Nicholas Crafts, 2022. "The 15‐Hour Week: Keynes's Prediction Revisited," Economica, London School of Economics and Political Science, vol. 89(356), pages 815-829, October.
    2. Timo Boppart & L. Rachel Ngai, 2021. "Rising inequality and trends in leisure," Journal of Economic Growth, Springer, vol. 26(2), pages 153-185, June.
    3. Lei Fang & Anne Hannusch & Pedro Silos, 2021. "Luxuries, Necessities, and the Allocation of Time," FRB Atlanta Working Paper 2021-28, Federal Reserve Bank of Atlanta.
    4. Job Boerma & Loukas Karabarbounis, 2021. "Inferring Inequality With Home Production," Econometrica, Econometric Society, vol. 89(5), pages 2517-2556, September.
    5. Leonard I. Nakamura, 2020. "Evidence of Accelerating Mismeasurement of Growth and Inflation in the U.S. in the 21st Century," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2020-15, Economic Statistics Centre of Excellence (ESCoE).
    6. Lei Fang & Anne Hannusch & Pedro Silos, 2020. "Bundling Time and Goods: Implications for Hours Dispersion," DETU Working Papers 2003, Department of Economics, Temple University.
    7. Job Boerma & Aleh Tsyvinski & Alexander P. Zimin, 2022. "Bunching and Taxing Multidimensional Skills," Papers 2204.13481, arXiv.org.
    8. Fang, Lei & Yang, Fang, 2022. "Consumption and hours in the United States and Europe," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    9. Alexandr Kopytov & Nikolai Roussanov & Mathieu Taschereau-Dumouchel, 2023. "Cheap Thrills: The Price of Leisure and the Global Decline in Work Hours," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 1(1), pages 80-118.
    10. Loukas Karabarbounis, 2021. "Comment on "From Mancession to Shecession: Women's Employment in Regular and Pandemic Recessions"," NBER Chapters, in: NBER Macroeconomics Annual 2021, volume 36, pages 158-172, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Time use; Consumption; Leisure productivity; Inequality;
    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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