Understanding Post-War Changes in U.S. Household Production: A Full-Income Demand-System Perspective

This paper examines the changing structure of U.S. household production over the post-World War II period. We apply production theory in order to define a new set of inputs for U.S. households and use newly constructed data so as to examine with the aid of a relatively simple complete household aggregate demand system. The goal is to extent our understanding of the changing structure of the U.S. household sector over the post-World War II period, including the demand for inputs of women’s and men’s housework or unpaid household labor and seven other aggregate input categories. The econometric estimate of the demand system yields plausible price and income elasticities for nine input groups. The own-price elasticity of demand for women’s and men’s housework is shown to be sizeable and similar in size. Women’s and men’s housework are also shown to be complements, rather than substitutes, but the other seven input categories are substitutes for women’s and men’s unpaid housework. Purchased housework substitutes and household appliance services are shown to be much better substitutes for men’s housework than for women’s housework. Also, men’s unpaid housework, household transportation input, recreation input, and “other inputs,” which are largely men’s and women’s leisure time, are luxury goods; and women’s unpaid housework, food at home, housing input, and household appliance input are normal goods. Purchased housework substitute services have an income elasticity that is not significantly different from zero. These results are obtained while controlling for the impacts of trend dominated factors. The methodology applied here has implications for cost of living comparisons over the post-War II period.