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Revisiting the role of home production in life-cycle labor supply

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  • R. Jason Faberman

Abstract

This paper revisits the argument, posed by Rupert, Rogerson, and Wright (2000), that estimates of the intertemporal elasticity of labor supply that do not account for home production are biased downward. The author uses the American Time Use Survey, a richer and more comprehensive data source than those used previously, to replicate their analysis, but he also explores how other factors interact with household and market work hours to affect the elasticity of labor supply. An exact replication of their analysis yields an elasticity of about 0.4, somewhat larger than previously estimated. Once the author accounts for demographics and household characteristics, particularly the number of children in the household, the estimate is essentially zero. This is true even when accommodating extensive-margin labor adjustments. Households' biological inability to smooth childbearing over the life cycle and the resulting income effect on market work hours drive this result.

Suggested Citation

  • R. Jason Faberman, 2010. "Revisiting the role of home production in life-cycle labor supply," Working Papers 10-3, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:10-3
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    References listed on IDEAS

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    1. Accounting for Non-Market Activity
      by Agent Continuum in Agent Continuum on 2010-01-19 19:45:18

    More about this item

    Keywords

    Labor supply ; Hours of labor ; Labor productivity;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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