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Full price elasticities and the value of time: A Tribute to the Beckerian model of the allocation of time

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  • François Gardes

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Axe Economie mathématique et jeux - CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - PSE - Paris School of Economics)

Abstract

This article adopts Becker's allocation of time framework to describe households' choices concerning both their monetary and time use expenditures in order to propose a new method to derive price elasticity at a micro level. Price and full income elasticities are estimated on a matching of a French Family Budget and a Time Use survey. The utility and home production functions are specified in order to allow the computation of the household's opportunity cost for time, which is shown to be smaller in average than the household's wage net of taxes. This estimate serves to value time dedicated to domestic activities and are used in the definition of full prices. The estimated price elasticities compare well with the estimates by other methods, such as Frisch's model based on independence of preferences assumptions or Hicks-Lewbel's method based on the aggregation of commodities. Finally, the model is applied to the computation of a welfare index, to the estimation of the household's labour supply and to a tentative explanation of the classic difference between cross-section and time-series estimates of income elasticities.

Suggested Citation

  • François Gardes, 2014. "Full price elasticities and the value of time: A Tribute to the Beckerian model of the allocation of time," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00973418, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00973418 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00973418
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    References listed on IDEAS

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    1. Bargain, Olivier & Peichl, Andreas, 2013. "Steady-state labor supply elasticities: A survey," ZEW Discussion Papers 13-084, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-430, June.
    3. Adolf Buse, 1994. "Evaluating the Linearized Almost Ideal Demand System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 781-793.
    4. Marta Zieba, 2009. "Full-income and price elasticities of demand for German public theatre," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 33(2), pages 85-108, May.
    5. François Gardes & Christian Loisy, 1998. "La pauvreté selon les ménages : une évaluation subjective et indexée sur leur revenu," Économie et Statistique, Programme National Persée, vol. 308(1), pages 95-112.
    6. François Gardes & Philip Merrigan, 2002. "Individual Needs and Social Pressure : Evidence on the Easterlin Hypothesis on Canadian Repeated Cross-Sections," Working Papers 2002-53, Center for Research in Economics and Statistics.
    7. Nicolas Ruiz & Alain Trannoy, 2008. "Le caractère régressif des taxes indirectes : les enseignements d'un modèle de microsimulation," Économie et Statistique, Programme National Persée, vol. 413(1), pages 21-46.
    8. Duncan, G.J. & Gardes, F. & Gaubert, P. & Starzec, C., 1998. "A Comparison of Consumption Models Estimated on American and Polish Panel and Pseudo-Panel Data," Papiers du Laboratoire de Microéconomie Appliquée 1998-09, Université Panthéon-Sorbonne (Paris 1).
    9. Nilton Cardoso & François Gardes, 1996. "Estimations de lois de consommation sur un pseudo-panel d'enquêtes de l'Insee ( 1979,1984,1989)," Économie et Prévision, Programme National Persée, vol. 126(5), pages 111-125.
    10. Deaton, Angus, 1974. "A Reconsideration of the Empirical Implications of Additive Preferences," Economic Journal, Royal Economic Society, vol. 84(334), pages 338-348, June.
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    Cited by:

    1. repec:eee:appene:v:206:y:2017:i:c:p:634-648 is not listed on IDEAS
    2. repec:hal:journl:halshs-01159507 is not listed on IDEAS
    3. Anil Alpman & François Gardes, 2016. "Welfare Analysis of the Allocation of Time During the Great Recession," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01159507, HAL.
    4. Anil Alpman & François Gardes, 2015. "Welfare Analysis of the Allocation of Time During the Great Recession," Documents de travail du Centre d'Economie de la Sorbonne 15012, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Mar 2016.

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